MATEX INTERNATIONAL LIMITEDmatex.com.sg/attachments/Matex/annualreports/6/Matex...MATEX INTERNATIONAL LIMITED ANNUAL REPORT 2016 LIVING THE CULTURE OF 47 Ayer Rajah Crescent, #05-10,

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LIVINGTHE CULTURE OF

47 Ayer Rajah Crescent, #05-10, Singapore 139947

Tel: 65 6861 0028 Fax: 65 6861 0128

Email: [email protected]: www.matex.com.sg

ECO-FRIENDLY ∙ NATURAL ∙ BIODEGRADABLE

ANUUAL REPORT 2016

CONTE

NTS

Corporate Information ................................................................................................................. 01

Corporate Profile ...................................................................................................................................... 02

Our Vision/Mission ............................................................................................................................... 03

Our Values/Promise ............................................................................................................................ 04

Group Structure ......................................................................................................................................... 05

Message to Shareholders ....................................................................................................... 06

Board of Directors .................................................................................................................................. 08

Key Management ................................................................................................................................... 10

Financial Highlights ........................................................................................................................... 11

Financial Contents ................................................................................................................................ 12

OUR GLOBAL PRESENCE

Korea

Taixing

Russia

Shanghai

Taiwan

Hong Kong

Philippines

Malaysia

Singapore

Indonesia

VietnamCambodia

Sri Lanka

Thailand

Myanmar

Nepal

Uzbekistan

Turkey

Syria

EgyptMorocco

USA

Mexico

Colombia

Peru

ChileArgentina

BrazilEcuador

Spain

Switzerland

England

GermanyFrance

Portugal

Pakistan

India

Bangladesh

Japan

Mauritius

South Africa

SHANGHAI

MALAYSIA HQ-SINGAPORE

TAIXINGTAIXING

This document has been prepared by the Company and its contents have been reviewed by the Company’s Sponsor, CIMB Bank Berhad, Singapore Branch (“Sponsor”) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), this being the SGX-ST Listing Manual Section B: Rules of Catalist.. The Sponsor has not independently verified the contents of this document.

This document has not been examined or approved by the SGX-ST. The SGX-ST and the Sponsor assume no responsibility for the contents of this document including the correctness of any of the statements or opinions made or reports contained in this document.

The contact persons for the Sponsor are Mr Yee Chia Hsing, Head, Catalist, Investment Banking and Mr Lee Chee Cheong, Associate Director, Investment Banking, CIMB Bank Berhad, Singapore Branch. The contact particulars are 50 Raffles Place, #09-01 Singapore Land Tower, Singapore 048623, Telephone: +65 6337 5115.

BOARD OF DIRECTORS

Dr John Chen Seow PhunNon-Executive Chairman and Inde-pendent Director

Dr Tan Pang KeeCEO / Managing Director

Mr Foo Der RongIndependent Director

Mr Wang Dao FuIndependent Director

Mr Dro Tan Guan Liang(Chen Guanliang)Executive Director

COMPANY SECRETARIES

Mr Teo Chin Kee

SHARE REGISTRAR

M&C Services Private Limited112 Robinson Road #05-01Singapore 068902

REGISTERED AND BUSINESS OFFICE

47 Ayer Rajah Crescent #05-10Singapore 139947Tel: (65) 6861 0028Fax: (65) 6861 0128Website: www.matex.com.sg

AUDITORS

Ernst & Young LLPChartered AccountantsOne Raffles QuayNorth Tower, Level 18Singapore 048583

Partner-in-charge:Mr Vincent Toong(Appointed since FY 2015)

PRINCIPAL BANKERS

DBS Bank Ltd6 Shenton Way DBS BuildingSingapore 068809

Oversea-Chinese BankingCorporation Limited65 Chulia StreetOCBC CentreSingapore 049513

United Overseas Bank Limited80 Raffles PlaceUOB Plaza 1Singapore 049513

Citibank N.A.8 Marina View #17-01 Asia Square Tower 1Singapore 018960

Standard Chartered Bank8 Marina BoulevardMarina Bay Financial CentreTower 1, Level 29Singapore 018981

Matex International Limited • Annual Report 2016 01

CORPORATE INFORMATION

Established in September 1989 and listed on Singapore Exchange since February 2004, Matex International limited is a leading manufacturer, supplier and marketer of quality dyestuffs and specialty chemicals, colour measurement and computer aided systems to various global markets such as textile, paper, leather, detergent and polymers industry. As part of its blueprint, it aims to be a world-class integrated service provider in CLEAN COLOUR SCIENCE TECHNOLOGIES the WORLD seeks, with our Center of Excellence in Singapore for PEOPLE, INNOVATIONS, PRODUCTS, SERVICES, TECHNOLOGIES and SOLUTIONS to our Markets.

Dedicated to serve, Matex has established a network of well-trained sales and marketing professionals with a strong presence in China to support its wide base of global customers. We are widely recognized for our strength in providing excellent technical support services in order to satisfy our customers’ ever changing needs. Across the years we have been awarded with numerous accolades for our efforts. Matex had been constantly ranked

as one of China’s top chemical companies and of recent we were recognized as Singapore Specialty Chemicals Company of the Year for our contributions.

Matex makes a concerted effort to integrate environmental and social concerns into business operations, ensuring a balanced and sustainable development of our businesses. Our world famous Megafix® reactive dye series is a testimonial of our

ability to constantly develop unique, innovative products and services by combining the latest technologies through continuous research and development, with our intimate knowledge and business experience. We strive to add value to our customers’ products, for higher quality, better performance, price competitiveness and eco-friendliness to achieve long term ‘win-win’ strategic partnerships.

Matex International Limited • Annual Report 201602

CORPORATE PROFILE

OUR VISIONTo be a world-class integrated service provider in

clean colour science technologies the world seeks,

with our center of excellence in Singapore for people,

innovations, products, services, technologies and

solutions to our markets.

OUR MISSIONTo meet to excel as a global competent solutions

provider with pools of innovative talents ready to

explore business opportunities and to deliver credible and

sustainable business growth.


OUR VALUESWe are customer-focused for full satisfaction and

we aim to be on-target to the right needs,

provide on time delivery on-demand for the highest and

consistent quality at affordable prices.

OUR PROMISETo meet the needs of our customers we value add through

competitive and innovative viable solutions.

The needs of our employees – with our corporate values.

The needs of our stakeholders – with healthy returns.

And the needs of our environment – by being sustainable.

04 Matex International Limited • Annual Report 2016

Amly Chemicals Co., Ltd

Unimatex Sdn Bhd.

Shanghai Matex Chemicals Co., Ltd

Matex Chemicals (Taixing) Co., Ltd

MIL - Matex International Limited (万得国际有限公司)

MHPL - Matex Holdings Pte Ltd (万得控股私人有限公司)

DPL - Dedot Pte Ltd (帝得貿易私人有限公司)

USB - Unimatex Sdn Bhd (全万得私人有限公司)

DSB - Dedot Sdn Bhd (帝得貿易(马來西亚)私人有限公司)

ACL - Amly Chemicals Co., Ltd (安力化学(泰兴)有限公司)

MCT - Matex Chemicals (Taixing) Co., Ltd (万得化工(泰兴)有限公司)

SMC - Shanghai Matex Chemicals Co., Ltd (上海万得化工有限公司)

DTS - Dedot Trading (Shanghai) Co., Ltd (帝得貿易(上海)有限公司)

MHK - Matex Holdings (HK) Ltd (万得控股(香港)有限公司)

DSB 100% (Malaysia)

USB 100% (Malaysia)

MHPL 100% (Singapore)

MHK 100% (Hong Kong)

DPL 100% (Singapore)

SMC 60%(China, SHANGHAI)

MCT 60%(China, TAIXING)

ACL 100%(China, TAIXING)

DTS 100% (China SHANGHAI)

MIL(Holding Co., Singapore)


GROUP STRUCTURE

Dear Shareholders,

2016: STAYING RESILIENT!Against the backdrop of a challenging macroeconomic environment, Matex International Limited (“Matex”) has successfully transferred to the Catalist Board during the course of the year.

Going forward, the Group will be working hard to develop stronger supply chain partnerships and use latest available technologies to improve its operational efficiencies and further diversify into complementary areas of the clean colour science business.

It will pursue better sales outside its PRC market in its vision to internationalize Matex® and its brand and hope to constantly optimize its manufacturing facilities, driving down cost.

As a responsible corporate citizen, we continued to play our part to champion a growing diversity of programs and initiatives to give back to society as part of our ongoing CSR initiatives, during the course of the year, some of the highlights include;

1) Matex contributed to the Children’s Charities Association of Singapore, an Associate member of NCSS (National Council of Social Service), which provides best available holistic education, structured programmes, special needs equipment and care assistance to the less privileged children for a better life and brighter hope for the future. Its member charities include Association for Persons with Special Needs, Cerebral Palsy Alliance Singapore, Movement for the Intellectually Disabled of Singapore, St Andrew’s Mission Hospital, Singapore Children’s Society and The Singapore Association for the Deaf.

2) The Group released its 2016 COP (Communication on Progress Report) on the UN Global Compact

Website. We are constantly on the lookout for ways to reduce negative impact on the environment by lowering our carbon emissions and improving energy efficiency in our daily operations.

3) It continues to pledge its commitment to Fair Employment Practices under the framework of TAFEP (Tripartite Alliance for Fair & Progressive Employment Practices) organized and endorsed by Ministry of Manpower of Singapore, NTUC (National Trade Union Congress) and SNEF (Singapore National Employers Federation).

4) For the 6th year running, it helped the SDC (Society of Dyers and Colourists) organize and produce a country winner in Singapore by working closely with the Singapore’s local Textile and Fashion Schools. The SDC is the world’s leading independent, educational charity dedicated to advancing the science and technology of colour worldwide.

REVIEW OF FINANCIAL PERFORMANCEThe Group recorded a total revenue of S$77.7m for the full year ended 31 December 2016 (“FY2016”), a drop of S$14.3m or 15.5% in comparison to S$92.0m for the corresponding year ended 31 December 2015 (“FY2015”). The reduction in sales was as a result of temporary decline in our plant’s production as we sought to comply with the Chinese Government’s order to move away from higher polluting coal-powered generator to cleaner gas-powered generator. The Group while in transition of changing the fuel source, has switched to use charcoal while waiting for the construction of gas burner to be completed. The construction are in two phases, first phase is expected to be completed by first quarter this year. Second phase would commence as soon as the first phase is completed and is expected to complete in six months’ time.

GROSS PROFITAs a result of the drop in revenue, the Group’s FY2016 gross profit has decreased by S$0.8m or 6.3% to S$12.3m (FY2015: S$13.1m). However, gross profit margin has increased from 14.3% to 15.8%. This is due to the decrease in the cost of raw materials in the last quarter of FY 2016.

NET OPERATING EXPENSESNet operating expenses have decreased by S$0.1m from S$13.1m in FY2015 to S$13.0m in FY2016. The decrease is due to a decrease in general and administrative expenses by S$0.9m or 10.4%, mainly due to the absence of legal and professional fee incurred for the proposed reverse takeover exercise which occurred during FY2015. The proposed exercise was subsequently terminated after the long-stop date of 31 March 2016 was not extended.

The decrease is partially offset by the increase in selling and distribution expenses by S$0.8m or 17.9%, mainly attributed to increase in sales commission paid to sales agents.

NET FINANCIAL EXPENSEThe Group recorded a net financial expense of S$366k in FY2016, as compared to an amount of S$461k in FY2015. The decrease of S$95k in net financial expense is mainly due to decrease in financial cost of S$178k offset by a decrease in financial income of S$83k. The reduction of financial cost was due to lower borrowings occurred during FY2016.

TAXTaxation is in line with profits made by profitable subsidiaries in China, and the reduction in tax amount incurred in FY2016 was due to lower profits generated for the year. There is no such tax charge for other entities in the Group due to their unutilised losses carried forward. The losses made by these entities cannot be used to offset the profits generated by the profitable subsidiaries, as they are not assessed by the same tax jurisdiction.


MESSAGE TO SHAREHOLDERS

NET RESULTSAs a result of the above, the Group registered a loss before tax of S$1.0m for FY2016 as compared to loss before tax of S$0.5m for FY2015. The loss after tax attributable to equity holders of the Company is approximately S$1.5m in FY2016, as compared to the loss after tax of S$1.6m recorded in FY2015.

The Group’s property, plant and equipment (“PPE”) including land use rights are at S$18.1m and S$17.2m as at 31 December 2015 and 31 December 2016 respectively. The reduction in PPE was attributed by depreciation and amortisation charges of S$2.1m, partially offset by approximately S$2m incurred for capital expenditure in FY2016. The capital expenditure was largely incurred for constructing the natural gas burner, due to new regulations set by China to use a cleaner fuel source.

Inventories are at S$20.9m and S$17.8m as at 31 December 2015 and 31 December 2016 respectively. The decrease of S$3.1m is largely due to improved inventory management by the Group and temporary lower production due to change in power generator.

Trade and notes receivables has decreased from S$34.4m for FY2015 to S$30.7m for FY2016, mainly due to the reduction in sales.

Other receivables has increased from S$0.7m for FY2015 to S$1.2m for FY2016. The increase was attributed to medical expenses incurred for a worker, which is claimable from insurance.

Cash and cash equivalents for the year decreased from S$13.0m as at 31 December 2015 to S$8.0m as at 31 December 2016. The decrease in cash was mainly due to repayment of short term loan.

Trade payables has decreased from S$9.6m in FY2015 to S$6.1m in FY2016. The reduction in trade payables was funded by increase in bills payable to banks.

Short term loan has decreased from S$11.4m in FY2015 to S$5.7m in FY2016. Due to repayment of loan, cash balance was greatly reduced as a result.

Overall, Group’s equity as at 31 December 2016 was S$53.7m, a reduction of S$3.9m or 6.8% from the position as at 31 December 2015.

FUTURE OUTLOOKMatex will continue to navigate cautiously while leveraging on a growing Asia market. With the headwinds brought on by weaknesses in global economies, coupled with the volatility in commodity prices and currencies, we expect a softer global macroeconomic outlook.

Our operations are inextricably tied to the health of the global economy, thus efforts to strive for higher rate of revenue growth may be impacted. While market conditions in the near term are challenging, we remain confident of our growth prospects over the mid to long term.

We anticipate Asia, one of the largest markets for chemicals, to continue to be a key contributor to our business and remain a growing market for us.

With a refined Asia-centric approach, driven with our vision to be a world-class integrated service provider for clean colour science technologies and solutions, the Group continues to develop and adopt strategies to diversify our business portfolio and fortify our position in the market. These strategies include, inter alia:

Reinforcing group-wide initiatives that focused on continuous sales improvements and value enhancements.

A continuous and systematic effort that increases profitability through sustainable increase of revenue and cost- saving, as well as cash-generating and efficiency improvement measures.

Further integration of a culture of continuous improvement into all our business units and activities based on operational, environmental, innovation and people excellence.

The management teams are putting in all efforts to continue to produce quality, ecologically friendly and better products at competitive prices. This will enable us to achieve a ‘win-win’ strategic partnership with our esteemed customers, and help them in turn to optimize their productivity and profitability.

WORDS OF APPRECIATIONOn behalf of the Board, we wish to extend our deep gratitude and heartfelt thanks to all our valued customers, business partners, associates and stakeholders, for your unwavering trust, support and confidence.

To two of our former Independent Directors, Dr Wang Kai Yuen and Mr Robson Lee Teck Leng, it is our great pleasure on behalf of the Board, to thank them for their dedication and the great job they had accomplished during their term as Independent Director.

To our team of dedicated staff around the world, for your continued commitment, dedicated contributions and working tirelessly to achieve excellence, we would like to strongly express our acknowledgement for your hard work.

We will continue to strive for adaptability and resilience, and pursue opportunities that will better position the Group for sustainable growth and value creation.

WELCOME TO THE BOARDWe are very pleased to welcome Mr Foo Der Rong and Mr Wang Dao Fu to the Board of Directors, of Matex. Mr Foo and Mr Wang both have been appointed as Independent Directors respectively on 10 May 2016 and 11 January 2017. Their skills set and experience will be an asset to the Board and the Group and we look forward to working with them in the near future.

Yours sincerely,

DR JOHN CHEN SEOW PHUNNon-Executive Chairman

DR ALEX TAN PANG KEECEO/Managing Director


Dr Chen has been our Chairman and Independent Director since 11 July 2003. He was a

Member of Parliament (“MP”) from September 1988 to May 2006. He was the Minister of State

for Communications from March 1997 to June 1999. From June 1999 to November 2001,

he was the Minister of State for Communications & Information Technology and Minister

of State for National Development. Dr Chen holds a Doctor of Philosophy (“Ph.D”) degree

in Electrical Engineering from the University of Waterloo, Canada. He taught at the National

University of Singapore from 1983 to 1991. In 1991, he became the Assistant Secretary

General of the National Trades Union Congress (NTUC) until 1997. Dr Chen also served as

the Deputy Chairman and Managing Director of the NTUC Healthcare Cooperative Ltd from

1992 to 1997. Dr Chen has served as a board member of the Economic Development Board

(EDB), the Housing & Development Board (HDB), the then Port of Singapore Authority (PSA)

and Singapore Power Ltd. He is presently the Executive Chairman of Pavillon Holdings Ltd

(formerly known as Thai Village Holdings Ltd) and Chairman of SAC Capital Pte Ltd. He also

sits on the board of several public listed companies as an independent director.

Mr Foo was appointed as an Independent Director of the Company on 10th May 2016. He graduated with a Bachelor of Commerce Degree from Nanyang University and has a wealth rich experience and knowledge in business development, corporate restructuring, investment strategies and operation management, in a wide range of industries.

Mr Foo is currently a Non-Executive Director of Southern Lion Sdn Bhd and an Independent Director of Pavillon Holdings Ltd. His previous appointments include being the Managing Director/Chief Executive Director of Intraco Ltd and Hanwell Holdings Ltd (formerly known as PSC Corporation Ltd) and Executive Director of Tat Seng Packaging Group Ltd. He was once appointed as the Vice Chairman of Teck Ghee Community Centre and is currently served as a Patron of Teck Ghee Community Centre.

Mr Wang Dao Fu is our Independent Director since 11 January 2017. He graduated with

Bachelor of Law from Peking University in 1984. From August 1993 till May 2002, he had

been working with many established Singapore law firms, as their Chinese Legal Counsel.

Following that Mr Wang set up Shanghai Yuantai Law Offices in 2004 and is the firm’s

founding partner. He has more than 30 years of PRC legal practice experience in wide

ranging areas of capital market, corporate finance and mergers & acquisition. Mr Wang

currently serves as the Independent Director of a few companies which include Jiangnan

Agriculture Commercial Bank (China), Dazhou Commercial Bank (China), Proceq Trading

(Shanghai) Co. Ltd (China), TH Straits 2015 Pte Ltd., MOBO Information Technology Pte Ltd

and XIAOJU Singapore Pte Ltd.

Dr JOHN CHEN SEOW PHUNNon-Executive Chairman & Independent Director

MR FOO DER RONGIndependent Director

Mr WANG DAO FUIndependent Director


BOARD OF DIRECTORS

Dr Tan founded our Company in September 1989 and was appointed as our Managing

Director since early 1990. Dr Tan has more than 30 years of related experience and is

instrumental in the development of our Company since its inception. He is in charge of

formulating corporate strategies and management of our growth and development. He

is also involved in developing new products and identifying new markets for our Group.

Dr Tan holds a Bachelor of Science degree in Chemistry from the University of London

and obtained an honorary Ph.D in business administration from the Honolulu University,

Hawaii, USA, in 2003. Between 1967 and 1989, Dr Tan was the Regional Technical Manager

of the Sandoz Division of F.E. Zuellig (Trading) Pte Ltd (1976 to 1988), Technical Supervisor

of Guthrie (M.S.) Pte Ltd (1973 to 1975) and a Chemical Analyst in the Malaysia Chemistry

Department (1967 to 1972).

Mr Dro Tan was appointed as our Executive Director since 2010. He is responsible for the

Group’s business, projects that cater to branding of the company and product innovation

and development. He helps out with the design, expansion and overseeing of the group’s

buildings and infrastructures. He is actively involved in the group’s diversification projects

that aim to complement the group’s existing core businesses. He has also been appointed

as Vice President of International Affairs at Textile and Fashion Federation Singapore a

non-profit organisation, and an active member of its executive and management committee

dedicated to help the Singapore textile and fashion industry and its members globalize.

He is also appointed as Executive Council Member in the 7th Council of the China Dyestuff

Industry Association. Prior to this he has worked with various architectural firms in Seoul,

Korea and Singapore. He is an ACAD board member of the Textile and fashion training center

TaFtc. Mr Tan graduated with a Masters in Architecture and Minor in Technopreneurship

from the National University of Singapore in 2008; his research thesis focused on the global

study and development of sustainable suburban communities.

Dr TAN PANG KEEManaging Director & Chief Executive Officer

Mr DRO TAN GUAN LIANGExecutive Director


Ms SERINE YEO NGEN HUAYChief Financial Officer

Ms Serine Yeo joined the Group as

Chief Financial Officer since February

2013. She has been put in-charge of

finance, accounting, taxation and

treasury of the Group. In addition to

her financial focus, Ms Yeo is actively

involved in line-of-business executive

and operations management. She

also assists the Executive Directors to

oversee the financial planning, business

development and the management

of strategic business investments.

Prior to joining the Company, Ms Yeo

was the Financial Controller with one

of the Multi-National Company. She

has acquired vast amount of working

experience working as Group Financial

Controller with various private, local and

overseas listed companies.

Ms Yeo holds a Bachelor degree in

Commerce, major in Accounting &

Finance from The University of Southern

Queensland, Australia and Diploma in

Computer Studies from The National

Centre for Information Technology of

United Kingdom. She is also a Fellow

Certified Public Accountant with

CPA, Australia. In year 2016, she has

been admitted as an Accredited Tax

Practitioner (Income Tax & GST) by

Singapore Institute of Accredited Tax

Professionals.

Mr TAN PANG SIMDirector / General Manager of

Unimatex Sdn Bhd

Mr Tan has been the General Manager

of Unimatex Sdn Bhd (USB) since 2000.

He is in charge of the management

and development of corporate policies

and procedures for USB. Mr Tan holds a

diploma in commercial accounting from

the Singapore Commercial Accounting

Institute and is an Associate Financial

Planner with the Financial Planner

Association of Malaysia. Having started

his career as an Accountant and Office

Administrator in Pacific Food Product

Sdn Bhd in 1971, Mr Tan has more than

30 years of experience in company

administration and management as well

as financial planning. Prior to joining us,

he was the Financial Controller/Director

of Macinda Sdn Bhd between 1989 and

2000.


KEY MANAGEMENT

REVENUE ($’000)

(LOSS)/PROFIT BEFORE TAX ($’000)

SHAREHOLDERS’ EQUITY ($’000)

NET ASSET VALUE PER SHARE (CENTS)

GROUP CONSOLIDATED STATEMENTS

* Earnings per share is calculated by dividing the net profit/(loss) attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year of 267,392,320 (2015/2014: 267,392,320/240,433,416) shares.

** The net asset value per share as at 31 December 2016 are computed based on 267,392,320 (2015/2014: 267,392,320/267,392,320) ordinary shares

37,778

14.13

2016 2015 2014

2016 2015 2014

Statement of Comprehensive Income ($’000)

Revenue 77,687 91,976 104,800

Gross Profit 12,308 13,134 17,871

Net operating & financial expenses (13,337) (13,594) (12,690)

(Loss)/Profit before tax (1,029) (460) 5,181

Income tax (454) (993) (555)

(Loss)/Profit after tax (1,483) (1,453) 4,626

Attributable to:

Owners of the parent (1,466) (1,631) 2,704

Non-controlling interests (17) 178 1,922

(1,483) (1,453) 4,626

(Loss)/Profit earning per share (cents)* (0.55) (0.61) 1.12

Balance Sheet ($’000) (Restated) (Restated)

Property, plant and equipment 16,352 17,088 18,523

Other non-current assets 2,885 3,477 3,863

Current assets 57,145 67,082 57,147

Less: current liabilities (22,654) (30,001) (20,719)

Net current assets 34,491 37,081 36,428

Non current liabilities (39) (46) (66)

53,689 57,600 58,748

Owners of the parent 37,778 40,923 42,461

Non-controlling interests 15,911 16,677 16,287

53,689 57,600 58,748

Net asset value per share (cents)** 14.13 15.30 15.88

.

91,976

77,687

104,800

2016 2015 2014

(460)(1,029)

5,181

2016 2015 2014

40,92342,461

2016 2015 2014

15.3015.88


FINANCIAL HIGHLIGHTS

CONTE

NTS

Directors’ Statement ......................................................................................................................... 13

Independent Auditor’s Report .................................................................................... 16

Consolidated Statement of Comprehensive Income.......... 21

Balance Sheets ............................................................................................................................................. 22

Statements of Changes in Equity ........................................................................... 24

Consolidated Cash Flow Statement ................................................................. 26

Notes to the Financial Statements ...................................................................... 27

Report on Corporate Governance ........................................................................ 79

Statistic of Shareholders ........................................................................................................... 95

Notice of Twenty-Seventh Annual General Meeting ......... 97

Proxy Form

FINANCIAL

The directors present their statement to the members together with the audited consolidated financial statements of Matex

International Limited (the Company) and its subsidiaries (collectively, the Group) and the balance sheet and statement of changes

in equity of the Company for the financial year ended 31 December 2016.

OPINION OF THE DIRECTORS

In the opinion of the directors,

(i) the consolidated financial statements of the Group and the balance sheets and statement of changes in equity of the

Company are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at

31 December 2016 and the financial performance, changes in equity and cash flows of the Group and changes in equity

of the Company for the year ended on that date; and

(ii) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as

and when they fall due.

DIRECTORS

The directors of the Company in office at the date of this statement are:

Dr John Chen Seow Phun

Dr Tan Pang Kee

Mr Foo Der Rong

Mr Dro Tan Guan Liang (Chen Guanliang)

Mr Wang Dao Fu (appointed on 11 January 2017)

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Except as described in paragraph five below, neither at the end of nor at any time during the financial year was the Company

a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire

benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ Statement


DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings

required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company as stated

below:

Direct interest Deemed interest

At

1.1.2016

At

31.12.2016

At

1.1.2016

At

31.12.2016

The Company

(Ordinary shares)

Dr John Chen Seow Phun 100,000 100,000 – –

Dr Tan Pang Kee 58,232,000 58,232,000 – –

Mr Dro Tan Guan Liang (Chen Guanliang) 510,000 590,000 – –

There was no change in any of the above-mentioned interests in the Company between the end of the financial year and 21

January 2017.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share

options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year, or date

of appointment if later, or at the end of the financial year.

AUDIT COMMITTEE

The audit committee (AC) carried out its functions in accordance with section 201B (5) of the Singapore Companies Act, Chapter

50, including the following:

• Reviewed the audit plans of the internal and external auditors of the Group and the Company, and reviewed the internal

auditor’s evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given

by the Group and the Company’s management to the external and internal auditors

• Reviewed the half yearly and annual financial statements and the auditor’s report on the annual financial statements of

the Group and the Company before their submission to the board of directors

• Reviewed effectiveness of the Group and the Company’s material internal controls, including financial, operational and

compliance controls and risk management via reviews carried out by the internal auditor

• Met with the external auditor, other committees, and management in separate executive sessions to discuss any matters

that these groups believe should be discussed privately with the AC



AUDIT COMMITTEE (CONTINUED)

• Reviewed legal and regulatory matters that may have a material impact on the financial statements, related compliance

policies and programmes and any reports received from regulators

• Reviewed the cost effectiveness and the independence and objectivity of the external auditor

• Reviewed the nature and extent of non-audit services provided by the external auditor

• Recommended to the board of directors the external auditor to be nominated, approved the compensation of the external

auditor, and reviewed the scope and results of the audit

• Reported actions and minutes of the AC to the board of directors with such recommendations as the AC considered

appropriate

• Reviewed interested person transactions in accordance with the requirements of the Singapore Exchange Securities

Trading Limited’s Listing Manual

The AC, having reviewed all non-audit services provided by the external auditor to the Group, is satisfied that the nature and

extent of such services would not affect the independence of the external auditor. The AC has also conducted a review of

interested person transactions.

The AC convened two meetings during the year with full attendance from all members, except for one where a member was

absent. The AC has also met with internal and external auditors, without the presence of the Company’s management, at least

once a year.

Further details regarding the AC are disclosed in the Report on Corporate Governance.

AUDITOR

Ernst & Young LLP have expressed their willingness to accept reappointment as auditor.

On behalf of the board of directors:

Dr Tan Pang Kee Mr Dro Tan Guan Liang (Chen Guanliang)

Director Director

Singapore



To the Members of Matex International Limited

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

We audited the financial statements of Matex International Limited (the “Company”) and its subsidiaries (collectively, the “Group”),

which comprise the balance sheets of the Group and the Company as at 31 December 2016, the statements of changes in equity

of the Group and the Company and the consolidated income statement, consolidated statement of comprehensive income

and consolidated cash flow statement of the Group for the year then ended, and notes to the financial statements, including a

summary of significant accounting policies.

OPINION

In our opinion, the accompanying consolidated financial statements of the Group, the balance sheet and the statement of

changes in equity of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act,

Chapter 50 (the Act) and Financial Reporting Standards in Singapore (FRSs) so as to give a true and fair view of the consolidated

financial position of the Group and the financial position of the Company as at 31 December 2016 and of the consolidated

financial performance, consolidated changes in equity and consolidated cash flows of the Group and changes in equity of the

Company for the year ended on that date.

BASIS FOR OPINION

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards

are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are

independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional

Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are

relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance

with these requirements and the ACRA Code. We believed that the audit evidence we have obtained is sufficient and appropriate

to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial

statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our

description of how our audit addressed the matter is provided in that context.

We have fulfilled our responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section

of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to

respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures,

including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying

financial statements.

Independent Auditor’s ReportFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


RECOVERABILITY OF TRADE ACCOUNT RECEIVABLES

As at 31 December 2016, the Group’s trade receivables represent approximately 31% of the Group’s total assets.

The collectability of trade receivables is a key element of the Group’s working capital management, which is managed on an

ongoing basis by the respective local management. The determination as to whether a trade receivable is collectible involves

management judgement. As disclosed in Note 2.4(a), management considers the age of the outstanding balances, location

of customers, existence of disputes, recent historical payment patterns and other available information concerning the

creditworthiness of customers in determining the allowance for doubtful debts. As such, we determined that this is a key audit

matter.

As part of our audit, we assessed the Group’s processes relating to the monitoring of trade receivables and reviewed aging of

receivables to identify collection risks. We requested for trade receivable confirmations and reviewed management’s reconciliation

of confirmation replies, where applicable. We also performed procedures to check for receipts from selected customers subsequent

to the financial year end. We reviewed management’s assumptions used in assessing the adequacy of the amount of allowance

for doubtful debts through review of specific debtors’ payment histories and management’s assessment of the credit risk of these

debtors. We also considered the adequacy of the Group’s disclosures of trade receivables and the related risks such as credit risk

and liquidity risk in Notes 30(a) and 30(b) to the financial statements.

ALLOWANCE FOR SLOW-MOVING AND OBSOLETE INVENTORIES

As of 31 December 2016, the carrying amount of the Group’s inventories totalled $17.8mil, representing approximately 23% of

the Group’s total assets. As disclosed in Note 2.4(a), management has to exercise significant judgement to determine the amount

of allowance for slow-moving and obsolete inventories by considering factors such as the age of the inventory, future market

demand and pricing competition. As such, we determined that this is a key audit matter.

As part of our audit, we attended and observed management’s inventory counts at selected inventory locations, including the

identification of obsolete inventories by management. We evaluated management’s analyses and assessments on the carrying

values of slow-moving and obsolete inventories by comparing the carrying values of these inventories against the selling prices of

the inventories in the recent sales transactions or upcoming customer orders. We also considered the adequacy of the disclosures

related to inventories in Note 13 to the financial statements.




OTHER INFORMATION

Management is responsible for other information. The other information comprises the information included in the annual report,

but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance

conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in

the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is

a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND DIRECTORS FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the

provisions of the Act and FRSs, and for devising and maintaining a system of internal accounting controls sufficient to provide a

reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly

authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain

accountability of assets.

In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management

either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is

a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.




AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional skepticism throughout

the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design

and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to

provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt

on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required

to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our

auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether

the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities

within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,

supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant

audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence,

and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,

and where applicable, related safeguards.




AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the

financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report

unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine

that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary

corporations incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions

of the Act.

The engagement partner on the audit resulting in this independent auditor’s report is Vincent Toong,

Ernst & Young LLP

Public Accountants and

Chartered Accountants

Singapore

31 March 2017




Note 2016 2015

$’000 $’000

(restated)

Revenue 3 77,687 91,976

Cost of sales (65,379) (78,842)

Gross profit 12,308 13,134

Other income 112 120

Selling and distribution expenses (5,057) (4,289)

Administrative expenses (8,025) (8,960)

Other operating expenses (1) (4)

Finance income 4 436 519

Finance expenses 4 (802) (980)

Loss before tax 5 (1,029) (460)

Income tax expense 7 (454) (993)

Loss after tax (1,483) (1,453)

Other comprehensive income:

Item that may be reclassified subsequently to profit or loss

Currency translation difference (2,428) 305

Other comprehensive income for the year, net of tax (2,428) 305

Total comprehensive income for the year (3,911) (1,148)

(Loss)/profit attributable to:

Owners of the parent (1,466) (1,631)

Non-controlling interests (17) 178

(1,483) (1,453)

Total comprehensive income attributable to:

Owners of the parent (3,145) (1,538)

Non-controlling interests (766) 390

(3,911) (1,148)

Loss per share

- basic and diluted (cents) 26 (0.55) (0.61)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Comprehensive IncomeFOR THE YEAR ENDED 31 DECEMBER 2016


Note Group2016 2015 1 Jan 2015$’000 $’000 $’000

(restated) (restated)

Non-current assetsProperty, plant and equipment 8 16,352 17,088 18,523Land use rights 9 889 1,004 1,104Intangible assets 10 43 73 122Investment properties 11 36 37 42Trade and notes receivables 14 1,917 2,363 2,595Current assetsInventories 13 17,810 20,907 16,022Trade and notes receivables 14 28,792 31,993 30,498Other receivables and deposits 15 1,247 720 619Advances to suppliers 970 232 1,014Prepayments 292 226 150Tax recoverable – – 411Fixed deposits 16 4,692 3,077 4,740Cash and bank balances 16 3,342 9,927 3,693

57,145 67,082 57,147

Current liabilitiesTrade payables 17 6,132 9,591 5,016Bills payable to banks 18 2,575 22 581Other payables and accruals 19 7,823 8,307 7,826Advances from customers 73 86 111Finance lease liabilities 20 22 28 31Term loans 21 5,702 11,391 7,154Tax payable 327 576 –

22,654 30,001 20,719

Net current assets 34,491 37,081 36,428

Non-current liabilitiesFinance lease liabilities 20 39 46 66

Net assets 53,689 57,600 58,748

EquityShare capital 22 23,406 23,406 23,406Capital reserve 23 294 294 294Enterprise expansion reserve 24 4,369 4,369 4,369General reserve 24 4,369 4,369 4,369Translation reserve 25 – 1,679 1,586Retained earnings 5,340 6,806 8,437

37,778 40,923 42,461Non-controlling interests 15,911 16,677 16,287

Total equity 53,689 57,600 58,748


Balance SheetsAS AT 31 DECEMBER 2016


Note Company

2016 2015

$’000 $’000

Non-current assets

Property, plant and equipment 8 249 286

Intangible assets 10 4 13

Investment in subsidiaries 12 12,055 12,055

Trade and notes receivables 14 1,889 2,334

Current assets

Inventories 13 80 138

Trade and notes receivables 14 2,374 2,619

Other receivables and deposits 15 897 1,588

Prepayments 24 17

Fixed deposits 16 3,004 3,022

Cash and bank balances 16 234 579

6,613 7,963

Current liabilities

Trade payables 17 – 97

Other payables and accruals 19 504 703

Finance lease liabilities 20 11 18

Term loans 21 500 500

1,015 1,318

Net current assets 5,598 6,645

Non-current liabilities

Finance lease liabilities 20 4 –

Net assets 19,791 21,333

Equity

Share capital 22 23,406 23,406

Accumulated losses (3,615) (2,073)

Total equity 19,791 21,333


Balance SheetsAS AT 31 DECEMBER 2016


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Statements of Changes in EquityAS AT 31 DECEMBER 2016


Company

Share

capital

Accumulated

losses Total

$’000 $’000 $’000

Opening balance as at 1 January 2015 23,406 (222) 23,184

Loss for the year – (1,851) (1,851)

Closing balance as at 31 December 2015 23,406 (2,073) 21,333

Opening balance as at 1 January 2016 23,406 (2,073) 21,333

Loss for the year – (1,542) (1,542)

Closing balance as at 31 December 2016 23,406 (3,615) 19,791


Statements of Changes in EquityAS AT 31 DECEMBER 2016


Note 2016 2015$’000 $’000

(restated)

Cash flows from operating activitiesLoss before tax (1,029) (460)Adjustments: Amortisation of intangible asset 10 31 50 Amortisation of land use rights 9 70 116 Depreciation of property, plant and equipment 8 2,008 2,277 Gain on disposal of property, plant and equipment (5) (2) Impairment of trade receivables 14 11 35 Allowance of inventory obsolescence/inventories written down 13 25 173 Interest expense 4 802 980 Interest income 4 (436) (519) Property, plant and equipment written off – 56 Foreign exchange (gain)/loss (88) 170

Operating profit before working capital changes 1,389 2,876 Decrease/(increase) in inventories 2,256 (5,058) Decrease/(increase) in trade and other receivables 6,201 (5,396) Increase in prepayment (75) (76) (Increase)/decrease in advances to suppliers (746) 782 (Decrease)/increase in trade and other payables (3,294) 5,057 Decrease in advances from customers (9) (25)

Cash generated from/(used in) operations 5,722 (1,840)Interest paid (802) (980)Interest received 436 519Income tax paid (704) (2)

Net cash generated/(used in) from operations 4,652 (2,303)

Cash flows from investing activitiesPurchase of property, plant and equipment 8 (2,018) (599)Proceeds from disposal of property, plant and equipment 6 11

Net cash used in investing activities (2,012) (588)

Cash flows from financing activitiesIncrease in restricted cash (905) –Repayment of finance lease obligations (13) (23)(Repayment)/proceeds from loans and borrowings (5,207) 4,237(Increase)/decrease in note receivables from banks (4,365) 3,997Increase/(decrease) in bills payable to banks 2,557 (559)

Net cash (used in)/generated from financing activities (7,933) 7,652

Net (decrease)/increase in cash and cash equivalents (5,293) 4,761Effect of exchange rate changes on cash and cash equivalents (582) (190)Cash and cash equivalents at beginning of financial year 13,004 8,433

Cash and cash equivalents at end of financial year 16 7,129 13,004


Consolidated Cash Flow StatementFOR THE YEAR ENDED 31 DECEMBER 2016


1. CORPORATE INFORMATION

Matex International Limited (the “Company”) is a limited liability company, which is incorporated and domiciled in the

Republic of Singapore and publicly traded on the Singapore Exchange.

The registered office and principal place of business of the Company is located at 47 Ayer Rajah Crescent #05-10, Singapore

139947.

The principal activities of the Company are the formulation, manufacturing and sale of specialty chemicals focusing on

dyestuff and auxiliaries for the textile industry.

The principal activities of the subsidiaries are disclosed in Note 12 to the financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the

Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand

($’000) except when otherwise indicated.

The Accounting Standards Council announced on 29 May 2014 that Singapore incorporated companies listed on the

Singapore Exchange will apply a new financial reporting framework identical to the International Financial Reporting

Standards. The Group will adopt the new financial reporting framework on 1 January 2018.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial

year, the Group has adopted all the new and revised standards which are effective for annual financial periods beginning

on or after 1 January 2016. The adoption of these standards did not have any effect on the financial performance or

position of the Group and the Company.

Notes to the Financial StatementsFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3 Standards issued but not yet effective

The Group has not adopted the following standards that have been issued but are not yet effective:

Description

Effective for annual

periods beginning

on or after

Amendments to FRS 7 Disclosure Initiative 1 January 2017

FRS 109 Financial Instruments 1 January 2018

FRS 115 Revenue from Contracts with Customers 1 January 2018

FRS 116 Leases 1 January 2019 1 January 2019

Except for FRS 109, FRS 115 and FRS 116, the directors expect that the adoption of the other standards above will have

no material impact on the financial statements in the period of initial application. The nature of the impending changes

in accounting policy on adoption of FRS 109, FRS 115 and FRS 116 are described below.

FRS 115 Revenue from Contracts with Customers

FRS 115 establishes a five-step model to account for revenue arising from contracts with customers. Under FRS 115,

revenue is recognised at an amount that reflects the consideration which an entity expects to be entitled in exchange

for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under FRS. Either a full retrospective

application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018.

Early adoption is permitted.

During 2016, the Group performed a preliminary assessment of FRS 115 which is subject to changes arising from a more

detailed ongoing analysis. The Group is in a business of providing manufacturing and sale of chemical and dyes products.

The Group expects the following impact upon adoption of FRS 115:

Allocating transaction price to performance obligations:

The Group enters into bundle contracts with the customers. Under FRS 115, the Group has to allocate the transaction

price to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or service

promised in the contract. The Group does not expect the application of the new methodology to have material impact

on the Group’s financial performance upon adoption of FRS 115.




2.3 Standards issued but not yet effective (Continued)

FRS 109 Financial Instruments

FRS 109 introduces new requirements for classification and measurement of financial assets, impairment of financial

assets and hedge accounting. Financial assets are classified according to their contractual cash flow characteristics and

the business model under which they are held. The impairment requirements in FRS 109 are based on an expected credit

loss model and replace the FRS 39 incurred loss model.

(a) Classification and measurement

The Company currently measures its investments in unquoted equity securities at cost. Under FRS 109, the

Company will be required to measure the investment at fair value. Any difference between the previous carrying

amount under FRS 39 and the fair value would be recognised in the opening retained earnings when the Company

applies FRS 109.

(b) Impairment

FRS 109 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables,

either on a 12-month or lifetime basis. The Group expects to apply the simplified approach and record lifetime

expected losses on all trade receivables. Upon application of the expected credit loss model, the Group expects

a significant impact on its equity due to unsecured nature of its loans and receivables, but it will need to perform

a more detailed analysis which considers all reasonable and supportable information, including forward-looking

elements to determine the extent of impact.

Transition

The Group plans to adopt the new standard on the required effective date without restating prior periods’ information

and recognises any difference between the previous carrying amount and the carrying amount at the begining of the

annual reporting period at the date of initial application in the opening retained earnings.

FRS 116 Leases

FRS 116 requires lessees to recognise most leases on balance sheets to reflect the rights to use the leased assets and the

associated obligations for lease payments as well as the corresponding interest expense and depreciation charges. The

standard includes two recognition exemption for lessees – leases of ‘low value’ assets and short-term leases. The new

standard is effective for annual periods beginning on or after 1 January 2019.

The Group is currently assessing the impact of the new standard and plans to adopt the new standard on the required

effective date. The Group expects the adoption of the new standard will result in increase in total assets and total liabilities,

EBITDA and gearing ratio.




2.4 Significant accounting estimates and judgements

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates

and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of

contingent liabilities at the balance sheet date. Uncertainty about these assumptions and estimates could result in

outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

(a) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the

reporting period are discussed below. The Group based its assumptions and estimates on parameters available

when the financial statements were prepared. Existing circumstances and assumptions about future developments,

however, may change due to market changes or circumstances arising beyond the control of the Group. Such

changes are reflected in the assumptions when they occur.

• Impairment of trade receivables

The Group makes an impairment of trade receivables based on an assessment of the recoverability of

trade receivables. Impairment is adopted to trade receivables where events or changes in circumstances

indicate that the balances may not be collectible. To determine whether there is objective evidence of

impairment, it requires the use of judgements and estimates. Where the expectation is different from the

original estimate, such difference will impact the carrying value of trade and other receivables and expensed

off as impairment of receivables in the period in which such estimate has been changed.

The carrying amount of the Group’s trade receivables at the end of the reporting period is $19,669,000

(2015: $27,374,000).

• Impairment of inventory

An impairment review is made periodically on inventory for slow moving inventory, obsolescence and

decline in net realisable value below cost. An allowance is recorded against the inventory balance for any

such declines. These reviews require management to estimate future market demand for the products,

pricing competitions and age of the inventory. Possible changes in these estimates could result in revisions

to the valuation of inventory. The carrying amount of Group’s inventories at the end of the reporting period

is disclosed in Note 13 to the financial statements.

The carrying amount of the Group’s inventory at the end of the reporting period is $17,810,000

(2015: $20,907,000).




2.4 Significant accounting estimates and judgements (Continued)

(b) Judgements made in applying accounting policies

Critical judgment is required in the application of accounting policies when preparing the Group’s consolidated

financial statements. Management is of the opinion that the instances of application of judgement are not

expected to have a significant effect on the amounts recognised in the financial statements, apart from those

involving estimates.

2.5 Foreign currency

The Group’s consolidated financial statements are presented in Singapore Dollars, which is also the Company’s functional

currency. Each entity in the Group determines its own functional currency and items included in the financial statements

of each entity are measured using that functional currency.

(a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its

subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating

those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are

translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured

in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial

transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange

rates at the date when the fair value was measured.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of

the reporting period are recognised in profit or loss.

(b) Consolidated financial statements

For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of

exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates

prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in

other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income

relating to that particular foreign operation is recognised in profit or loss.




2.6 Subsidiaries and basis of consolidation

(a) Subsidiaries

A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is exposed, or

has rights, to variable returns from its involvement with the investee and has the ability to affect those returns

through its power over the investee.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less

impairment losses.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as

at the balance sheet date. The financial statements of the subsidiaries used in the preparation of the consolidated

financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are

applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group

transactions are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control,

and continue to be consolidated until the date that such control ceases.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity

transaction. If the Group loses control over a subsidiary, it:

– De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at

the date when control is lost;

– De-recognises the carrying amount of any non-controlling interest;

– De-recognises the cumulative translation differences recorded in equity;

– Recognises the fair value of the consideration received;




2.6 Subsidiaries and basis of consolidation (Continued)

(b) Basis of consolidation (Continued)

– Recognises the fair value of any investment retained;

– Recognises any surplus or deficit in profit or loss;

– Re-classifies the Group’s share of components previously recognised in other comprehensive income to

profit or loss or retained earnings, as appropriate

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and

liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the

services are received.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition

date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or

liability will be recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any),

that are present ownership interests and entitle their holders to a proportionate share of net assets in the event

of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate

share of the acquiree’s identifiable net assets. Other components of the non-controlling interests are measured at

their acquisition date fair value, unless another measurement basis is required by another FRS.

2.7 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the

Company, and are presented separately in the consolidated statement of comprehensive income and within equity in

the consolidated balance sheet, separately from equity attributable to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for

as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are

adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which

the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in

equity and attributed to owners of the Company.




2.8 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue

can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration

received or receivable, taking into account contractually defined terms of payment and excluding taxes and duty.

(a) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the

goods to the customers, usually on delivery of goods. Revenue is not recognised to the extent where there are

significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of

goods.

(b) Interest income

Interest income is recognised as interest accrues using the effective interest method.

(c) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.9 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition,

construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the

asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs

are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are

expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection

with the borrowing of funds.

2.10 Leases

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased

item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value

of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are

apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest

on the remaining balance of the liability. Finance charges are charged to profit or loss.




2.10 Leases (Continued)

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if

there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The

aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term

on a straight-line basis.

2.11 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected

to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount

are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the

Group operates and generates taxable income.

Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised

outside profit or loss, either in other comprehensive income or directly in equity. Management periodically

evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are

subject to interpretation and establishes provisions where appropriate.

(b) Deferred tax

Deferred income tax is provided, using the liability method on temporary differences at the balance sheet date

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

– where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in

a transaction that is not a business combination and, at the time of the transaction, affects neither the

accounting profit nor taxable profit or loss; and

– in respect of taxable temporary differences associated with investments in subsidiaries, associates and

interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled

and it is probable that the temporary differences will not reverse in the foreseeable future.




2.11 Taxes (Continued)

(b) Deferred tax (Continued)

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and

unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible

temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

– Where the deferred tax asset relating to the deductible temporary difference arises from the initial

recognition of an asset or liability in a transaction that is not a business combination and, at the time of

the transaction, affects neither the accounting profit nor taxable profit or loss; and

– In respect of deductible temporary differences associated with investments in subsidiaries, associates and

interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that

the temporary differences will reverse in the foreseeable future and taxable profit will be available against

which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the

extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred

tax asset to be utilised. Unrecognised deferred tax assets are reassessed the end of each reporting period and are

recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset

to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the

asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively

enacted at the end of each reporting period.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax

items are recognised in correlation to the underlying transaction either in other comprehensive income or directly

in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.




2.11 Taxes (Continued)

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation

authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part

of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

2.12 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant

and equipment other than freehold land and buildings are measured at cost less accumulated depreciation and any

accumulated impairment losses.

Property, plant and equipment are depreciated using the straight-line method to write off the cost (in the case of People’s

Republic of China (“PRC”) subsidiary companies, less estimated residual value of the fixed asset at 10% of cost), over their

estimated useful lives. The estimated useful lives have been taken as follows:

Plant and equipment 3 to 10 years

Renovation, electrical and fittings 5 to 10 years

Motor vehicles 5 to 10 years

Leasehold properties 20 to 94 years

Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in

circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively,

if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit and loss in the

year the asset is derecognised.




2.13 Land use rights

Land use rights relate to properties in the PRC.

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less

accumulated amortisation. The land use rights are amortised on a straight-line basis over the lease term of 20 years.

An assessment of the carrying value of land use rights is made when there are indications that the assets have been

impaired or the impairment losses recognised in prior years no longer exists.

Gains or losses arising from the retirement or disposal of land use rights are determined as the difference between the

net disposal proceeds and the carrying amount of the asset and are recognised as income or expense in the profit or loss.

2.14 Intangible assets

Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are carried

at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets,

excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in

which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment

whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation

method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of

consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period

or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more

frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the

cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite

useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the

change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal

proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Intangible assets relate to technology know-how purchased and software. Technology know-how and software are stated

in the financial statements of the Group and of the Company at cost less accumulated amortisation and any impairment

in value. Technology know-how and software are amortised over a period of 10 years respectively.




2.15 Investment properties

Investment properties are properties that are either owned by the Group or leased under a finance lease that are held to

earn rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, or

for administrative purposes, or in the ordinary course of business. Investment properties comprise completed investment

properties and properties that are being constructed or developed for future use as investment properties. Properties

held under operating leases are classified as investment properties when the definition of an investment property is met.

Investment properties are initially measured at cost, including transaction costs.

Subsequent to initial recognition, investment properties are measured at fair value. Gains or losses arising from changes

in the fair values of investment properties are included in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is

permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on

the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.

2.16 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such

indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s

recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its

value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely

independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating

unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued

where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other

comprehensive income up to the amount of any previous revaluation.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine

the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of

the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been

determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit

or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.




2.17 Financial assets

Initial recognition and measurement

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual

provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at

fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified

as loans and receivables. Subsequent to initial recognition, such assets are measured at amortised cost using the effective

interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are

derecognised or impaired and through the amortisation process.

De-recognition

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On de-

recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration

received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in

profit or loss.




2.18 Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment

exists individually for financial assets that are individually significant, or collectively for financial assets that are not

individually significant. If the Group determines that no objective evidence of impairment exists for an individually

assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar

credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for

impairment and for which an impairment loss is, or continues to be recognised are not included in a collective

assessment of impairment.

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has incurred,

the amount of the loss is measured as the difference between the asset’s carrying amount and the present value

of estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a

variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is

recognised in profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if

an amount was charged to the allowance account, the amounts charged to the allowance account are written

off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,

the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor

and default or significant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively

to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed

to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The

amount of reversal is recognised in profit or loss.




2.18 Impairment of financial assets (Continued)

(b) Financial assets carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer

operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on

financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between

the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market

rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

2.19 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and at bank and fixed deposits. Cash equivalents are short-term, highly

liquid investments readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.

2.20 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their

present location and conditions are accounted for as follows:

(a) Raw materials: purchase costs on a weighted average basis;

(b) Finished goods and work-in-progress: cost of direct materials and labour and a proportion of manufacturing

overheads based on normal operating capacity.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of

inventories to the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion

and the estimated costs necessary to make the sale.




2.21 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the

financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of other financial liabilities not at fair value

through profit and loss, directly attributable transaction costs.

Subsequent measurement

After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured

at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities

are derecognised, and through the amortisation process.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When

an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms

of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the

original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised

in profit or loss.

2.22 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it

is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the

amount of the obligation can be estimated reliably.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer

probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the

effect of the time value of money is material, provisions are discounted using current pre-tax rate that reflects, where

appropriate, the risk specific to the liability. When discounting is used, the increase in provision due to passage of time

is recognised as a finance cost.




2.23 Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received

and all attaching conditions will be complied with.

2.24 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has

operations. The Company makes contributions to the Central Provident Fund (“CPF”) scheme in Singapore, a

defined contribution pension scheme. The subsidiary company in Malaysia makes contribution to the Employee

Provident Fund (“EPF”). The subsidiary companies incorporated and operating in the PRC are required to provide

certain staff pension benefits to their employees under existing PRC regulations. Pension contributions are provided

at rates stipulated by PRC regulations and are contributed to a pension fund managed by government agencies,

which are responsible for administering these amounts for the subsidiary companies’ PRC employees.

Contributions to national pension schemes are recognised as an expense in the period in which the related service

is performed.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they are accrued to the employees. The

undiscounted liability for leave expected to be settled wholly before twelve months after the end of the reporting

period is recognised for services rendered by employees up to the end of the reporting period.

2.25 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable

to the issuance of ordinary shares are deducted against share capital.

2.26 Segment reporting

Management has identified the Group operating entities by geographical segment. The Group is engaged in providing

products within a particular economic environment and that is subject to risks and returns that are different from those

of components operating in other economic environments.




2.27 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence

or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the

obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities

assumed in a business combination that are present obligations and which the fair values can be reliably determined.

3. REVENUE

Revenue represents sales of goods to customers, less discounts given and excludes sales tax.

4. FINANCE INCOME/(EXPENSES)

Group

2016 2015

$’000 $’000

Interest income

– fixed deposits and bank balances 436 519

Interest expenses

– term loans (784) (971)

– letters of credit and trust receipts (5) (3)

– finance leases (13) (6)

(802) (980)



5. LOSS BEFORE TAX

This is determined after crediting/(charging) the following:

Group

2016 2015

$’000 $’000

Amortisation of intangible assets (Note 10) (31) (50)

Amortisation of land use rights (Note 9) (70) (116)

Depreciation of property, plant and equipment (Note 8) (2,008) (2,277)

Inventories recognised as an expense in cost of sales (Note 13) (60,801) (64,894)

Audit fees paid to:

– Auditor of the Company (68) (74)

– Other auditors (164) (120)

Non-audit fees paid to:

– Auditor of the Company (9) (25)

– Other auditors (2) (2)

Personnel expenses (Note 6) (5,313) (5,313)

Impairment of trade receivables (Note 14) (11) (35)

Inventories written down (Note 13) (25) (173)

Property, plant and equipment written off – (56)

Foreign exchange (loss)/gain, net 13 (209)

Gain on disposal of property, plant and equipment 5 2

Operating lease expense (546) (67)

Transportation expense (1,200) (981)

Government grants 99 96

6. PERSONNEL EXPENSES (INCLUDING DIRECTORS’ REMUNERATION)

Group

2016 2015

$’000 $’000

Salaries and bonus 5,087 4,984

Pension contributions 194 177

Other personnel expenses 32 152

5,313 5,313



7. INCOME TAX EXPENSE

The major components of income tax expense for the year ended 31 December are:

Group

2016 2015

$’000 $’000

Statement of comprehensive income:

Current income tax

– Current income taxation 438 993

– Under provision in respect of previous years 16 –

Income tax expense recognised in profit or loss 454 993

Relationship between tax expense and accounting profit

The reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rate

for the years ended 31 December is as follows:

Group

2016 2015

$’000 $’000

Loss before tax (1,029) (460)

Tax at statutory tax rates of 17% (2015: 17%) (175) (78)

Tax effect of:

Non-deductible expenses 112 360

Income not subject to taxation (27) (37)

Difference in tax rates applicable to overseas operations 45 262

Utilisation of deferred tax assets not previously recognised (20) (18)

Deferred tax assets not recognised 477 479

Under provision of income tax in prior year 16 –

Others 26 25

Income tax expense recognised in profit or loss 454 993



7. INCOME TAX EXPENSE (CONTINUED)

The subsidiaries in the Group operating in the PRC are subject to tax rate of 25% (2015: 12.5% and 25%).

The Group’s subsidiaries, operating in Malaysia, are subject to statutory tax of 20% on the first Malaysian Ringgit RM500,000

(2015: RM500,000) of assessable profit for the year and 24% (2015: 25%) on all assessable profit in excess of RM500,000

(2015: RM500,000).

The corporate income tax rate applicable to the Company in Singapore is 17% (2015: 17%).

As at 31 December 2016, the Group and Company has unutilised tax losses of approximately $22,876,000 (2015:

$24,469,000) and $19,649,000 (2015: $22,204,000), unabsorbed capital allowances of $nil (2015: $1,304,000) and unabsorbed

approved donations of $Nil (2015: $12,500) available for set off against future taxable income, subject to the agreement by

the tax authorities of the countries in which the Group operates. During the year, there were adjustments to the Company’s

unutilised tax losses from the tax authorities of previous years’ tax assessments that led to a decrease in unutilised losses

of approximately S$2,555,000. The Group’s unutilised tax losses and unabsorbed capital allowances have no expiry date,

except for an amount $2,864,000 which will expire between two to five years.

At the end of the reporting period, no deferred tax liability (2015: nil) has been recognised for taxes that would be payable

on the undistributed earnings of certain of the Group’s subsidiaries as the Group has determined that undistributed

earnings of its subsidiaries will not be distributed in the foreseeable future. The deferred tax liability is estimated to be

approximately $446,000 (2015: $441,000).



8. PROPERTY, PLANT AND EQUIPMENT

Group

Leasehold

properties

Plant and

equipment

Renovation,

electrical

and fittings

Motor

vehicles

Construction

in progress Total

$’000 $’000 $’000 $’000 $’000 $’000

Cost

As at 1 January 2015 17,670 14,665 1,067 1,725 58 35,185

Additions 78 175 108 238 31 630

Disposals – (224) (13) (80) – (317)

Exchange differences 188 150 (8) (10) 1 321

As at 31 December 2015 and

1 January 2016 17,936 14,766 1,154 1,873 90 35,819

Additions 482 317 130 23 1,066 2,018

Disposals – (15) – (28) – (43)

Exchange differences (633) (589) (112) (36) (4) (1,374)

As at 31 December 2016 17,785 14,479 1,172 1,832 1,152 36,420

Accumulated depreciation

As at 1 January 2015 5,751 8,816 753 1,342 – 16,662

Charge for the year (Note 5) 805 1,275 72 125 – 2,277

Disposals – (224) (10) (74) – (308)

Exchange differences 136 60 (30) (66) – 100


1 January 2016 6,692 9,927 785 1,327 – 18,731

Charge for the year (Note 5) 780 1,044 76 108 – 2,008

Disposals – (14) – (28) – (42)

Exchange differences (249) (368) (2) (10) – (629)

As at 31 December 2016 7,223 10,589 859 1,397 – 20,068

Net carrying amount

As at 31 December 2016 10,562 3,890 313 435 1,152 16,352

As at 31 December 2015 11,244 4,839 369 546 90 17,088



8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Company

Leasehold

properties

Plant and

equipment

Renovation,

electrical

and fittings

Motor

vehicles Total

$’000 $’000 $’000 $’000 $’000

Cost

As at 1 January 2015 162 906 150 356 1,574

Additions – 95 – – 95

Disposals – (225) – – (225)


1 January 2016 162 776 150 356 1,444

Additions – – – 23 23

Disposals – (15) – (28) (43)

As at 31 December 2016 162 761 150 351 1,424

Accumulated depreciation and

impairment loss

As at 1 January 2015 110 849 12 349 1,320

Charge for the year – 28 19 7 54

Disposals 8 (224) – – (216)


1 January 2016 118 653 31 356 1,158

Charge for the year 8 28 21 3 60

Disposals – (15) – (28) (43)

As at 31 December 2016 126 666 52 331 1,175

Net carrying amount

As at 31 December 2016 36 95 98 20 249

As at 31 December 2015 44 123 119 – 286

(a) Construction-in-progress as at 31 December 2016 relates to the construction of the factory building and facilities

of subsidiaries in Taixing, Jiangsu Province, the PRC.



9. LAND USE RIGHTS

The land use rights held by the Group relate to properties at No. 8 Zhanan South Road & No. 1 Binjiang South Road, Taixing

Economic Development Zone, Jiangsu Province, the PRC and Plot 43/1 Hong Si Cun, Tang-Zhen Pudong, Shanghai, the PRC.

The land use rights have a 50-year tenure commencing at various dates from 1998 to 2006. The remaining amortisation

period of the land use rights in Jiangsu Province and Tang-Zhen Pudong are 7 years (2015: 8 years) and 10 years (2015:

11 years), respectively.

Group

2016 2015

$’000 $’000

Cost

At beginning of year 2,287 2,257

Exchange differences (102) 30

At end of year 2,185 2,287

Accumulated amortisation

At beginning of year 1,283 1,153

Amortisation (Note 5) 70 116

Exchange differences (57) 14

At end of year 1,296 1,283

Net carrying amount 889 1,004



10. INTANGIBLE ASSETS

Group Company

Technical

Know-how Software Total

Technical

Know-how

$’000 $’000 $’000 $’000

Cost

At 1 January 2015 267 241 508 267

Exchange differences – (7) (7) –

At 31 December 2015 and 1 January 2016 267 234 501 267

Exchange differences – 18 18 –

At 31 December 2016 267 252 519 267

Accumulated amortisation and impairment

At 1 January 2015 228 158 386 228

Amortisation (Note 5) 26 24 50 26

Exchange differences – (8) (8) –

At 31 December 2015 and

1 January 2016 254 174 428 254

Amortisation (Note 5) 9 22 31 9

Exchange differences – 17 17 –

At 31 December 2016 263 213 476 263

Net carrying amount

At 31 December 2016 4 39 43 4

At 31 December 2015 13 60 73 13

Technical know-how and software

Technical know-how allows the Company to enhance the Group’s product range in the pre-treatment and finishing

stages of the textile dyeing.

Software pertains to an enterprise-wide information system designed to coordinate information on resources, and activities

needed to enable the conduct of the business.



11. INVESTMENT PROPERTIES

Group

Leasehold

Land

$’000

Cost

As at 1 January 2015 and 31 December 2015 37

Exchange differences (1)

As at 31 December 2016 36

Net carrying amount



The investment properties held by the Group relate to long term leasehold land at Lot 198775 & 198776, R.P.T. Ulu Buntong,

Mukim Hulu Kinta, Perak, Malaysia. The investment property has a 99-year tenure ending in 2090. Investment properties

are measured at cost less any impairment as its fair value cannot be reliably measured.

12. INVESTMENT IN SUBSIDIARIES

Company

2016 2015

$’000 $’000

Unquoted equity shares, at cost 12,090 12,090

Less: Impairment loss (35) (35)

12,055 12,055



12. INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Composition of the Group

The Group has the following investment in subsidiaries.

Name of subsidiaries Principal activitiesCountry of

incorporationProportion (%) of

ownership interest2016 2015

% %

Held by the Company

Matex Holdings Pte Ltd

(“MHPL”)(4)

General wholesale trading &

dyestuffs manufacturing

Singapore 100 100

Shanghai Matex Chemicals

Co., Ltd (“SMC”)(2)

Manufacturing and sale of

dyestuffs

PRC 60 60

Unimatex Sdn Bhd (“USB”)(1) Formulating, manufacturing

and sale of dyestuffs, auxiliaries

and optical brighteners

Malaysia 100 100

Amly Chemicals Co., Ltd

(“Amly”)(2)


dyestuffs, auxiliaries and textile

chemicals

PRC 100 100

Matex Chemicals (Taixing)

Co., Ltd (“MCT”)(1)


dyestuffs

PRC 60 60

Dedot Sdn Bhd (“DSB”)(3) Manufacturing and wholesale

of all kinds of garments,

textile products and chemical

products (currently dormant)

Malaysia 100 100

Dedot Pte Ltd (“DPL”)(4) General wholesale trading Singapore 100 100

Held through a subsidiary

Dedot Trading (Shanghai)

Co., Ltd (“DTS”)(2)

Import, export and wholesale

of all kinds of garments,

textile products and chemical

products

PRC 100 100

Matex Holdings (HK) Ltd

(“MHK”)(5)

Investment Holding

(currently dormant)

Hong Kong 100 100




(a) Composition of the Group (Continued)

Impairment on the investment in subsidiary

Dedot Sdn Bhd (“DSB”) is currently dormant and is in a net tangible liabilities position. The Company fully impaired

the cost of investment in DSB of $35,000 in prior years.

(1) Audited by member firms of Ernst & Young Global;

(2) Audited by Shanghai ZhongHui, Certified Public Accountants in the PRC;

(3) Audited by Ling Kam Hoong & Co., Certified Public Accountants in Malaysia;

(4) Audited by AccAssurance LLP, Chartered Accountants in Singapore;

(5) Audited by Lawrence Cheung C.P.A Company Limited, Chartered Accountants in Hong Kong.

(b) Interest in subsidiaries with material non-controlling interest (NCI)

The Group has the following subsidiaries that have NCI that are material to the Group.

Name of subsidiary

Principal

place of

business

Proportion

of ownership

interest held

by non-

controlling

interest

Profit/(loss)

allocated to

NCI during

the reporting

period

Accumulated

NCI at the end

of reporting

period

31 December 2016:

Matex Chemicals (Taixing) Co., Ltd PRC 40% 346 5,318

Shanghai Matex Chemicals Co., Ltd PRC 40% (363) 202

31 December 2015:

Matex Chemicals (Taixing) Co., Ltd PRC 40% 961 4,972

Shanghai Matex Chemicals Co., Ltd PRC 40% (783) 565




(c) Summarised financial information about subsidiaries with material NCI

Summarised financial information including goodwill on acquisition and consolidation adjustments but before

intercompany eliminations of subsidiaries with material non-controlling interests are as follows:

Summarised balance sheets

Shanghai Matex

Chemicals Co., Ltd

Matex Chemicals

(Taixing) Co., Ltd.

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Current

Assets 29,170 40,602 29,643 30,929

Liabilities (10,156) (19,909) (23,564) (25,268)

Net current assets 19,014 20,693 6,079 5,661

Non-current

Assets 923 1,128 14,007 14,460

Net non-current assets 923 1,128 14,007 14,460

Net assets 19,937 21,821 20,086 20,121

Summarised statement of comprehensive income

Shanghai Matex

Chemicals Co., Ltd

Matex Chemicals

(Taixing) Co., Ltd.

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Revenue 27,466 38,640 58,711 69,027

(Loss)/profit before income tax (907) (1,957) 1,216 3,232

Income tax expense – – (352) (830)

(Loss)/profit after tax (907) (1,957) 864 2,402

Other comprehensive income – 21 – (26)

Total comprehensive income (907) (1,936) 864 2,376



13. INVENTORIES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Balance sheet:

Raw materials 5,859 3,512 – –

Work in progress 3,636 3,576 – –

Finished goods 8,315 13,819 80 138

Total inventories at lower of cost and

net realisable value 17,810 20,907 80 138

Income statement:

Inventories recognised as

an expense in cost of sales 60,801 64,894 67 7,476

Inclusive of the following charge:

– Inventories written-down 25 173 – 211

14. TRADE AND NOTES RECEIVABLES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Trade receivables

– Third parties 23,868 31,692 3,572 4,376

– Amount due from related companies – – 1,853 1,739

Less: Impairment of trade receivables (third parties) (4,199) (4,318) (1,162) (1,162)

19,669 27,374 4,263 4,953

Notes receivables 11,040 6,982 – –

Total trade and notes receivables 30,709 34,356 4,263 4,953

Add:

Other receivables (Note 15) 1,220 695 7 4

Deposits (Note 15) 27 25 – 12

Amount due from subsidiaries (Note 15) – – 890 1,572

Cash and cash equivalents (Note 16) 8,034 13,004 3,238 3,601

Total loans and receivables 39,990 48,080 8,398 10,142



14. TRADE AND NOTES RECEIVABLES (CONTINUED)

Trade receivables are presented as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Non-current assets 1,917 2,363 1,889 2,334

Current assets 28,792 31,993 2,374 2,619

30,709 34,356 4,263 4,953

Trade receivables are generally non-interest bearing and are granted 30 to 90 days’ terms. They are recognised at their

original invoice amounts which represent their fair values on initial recognition.

The Company has granted extended credit terms to a key customer and its balances are reflected under non-current

trade receivables.

Trade receivables denominated in foreign currencies at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

United States Dollar 5,142 5,091 4,263 4,953

Euro Dollar 89 82 – –

The notes receivable are with financial institutions in the PRC are non-interest bearing and have repayment terms ranging

from 1 to 12 months (2015: 1 to 12 months). All note receivables are denominated in Chinese Renminbi and the nature

of note receivables are trade related.



14. TRADE AND NOTES RECEIVABLES (CONTINUED)

Receivables that are past due but not impaired

The Group has trade receivables amounting to $9,774,000 (2015: $9,740,000) that are past due at the balance sheet date

but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows:

Group

2016 2015

$’000 $’000

Trade receivables past due but not impaired:

– Lesser than 3 months 1,713 2,652

– 3 months to 6 months 2,665 3,933

– 6 months to 12 months 1,232 240

– More than 12 months 4,164 2,915

9,774 9,740

Receivables that are impaired

The Group’s trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts

used to record the impairment are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Movement in allowance accounts:

At beginning of year 4,318 4,212 1,162 1,169

Impairment for the year (Note 5) 11 35 – –

Exchange differences (130) 71 – (7)

4,199 4,318 1,162 1,162

Concentration of credit risk relating to trade receivables is mitigated due to well managed dispersion of customers.

Therefore, the Group believes that no additional credit risk beyond amounts provided for collection loss is inherent in

the Group’s trade receivables.



15. OTHER RECEIVABLES AND DEPOSITS

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Other receivables 1,220 695 7 4

Deposits 27 25 – 12

Amount due from subsidiaries – – 890 1,572

1,247 720 897 1,588

Other receivables denominated in foreign currencies as at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

United States Dollar – – – 111

Hong Kong Dollar – – – 34

The amount due from subsidiaries is non-trade related, unsecured, non-interest bearing and repayable on demand and

are to be settled in cash.

Other receivables comprise mainly advances granted to third party and sales offices located at the PRC for operational

purposes. The amount is non-interest bearing and repayable on demand.

16. CASH AND CASH EQUIVALENTS

Cash and cash equivalents as at 31 December were as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Cash at banks and on hand 3,342 9,927 234 579

Fixed deposits 4,692 3,077 3,004 3,022

8,034 13,004 3,238 3,601



16. CASH AND CASH EQUIVALENTS (CONTINUED)

Cash at bank earns interest at rates based on daily bank deposit rates ranging from 0.03% to 0.35% (2015: 0.03% to 0.15%)

per annum.

Fixed deposits are placed with financial institutions for varying periods of between seven days and 3 months depending

on the immediate cash requirements of the Group. The fixed deposits earn interest at fixed deposit rates ranging from

0.12 % to 3.50% (2015: 0.12% to 3.50%) per annum.

Cash and short-term deposits denominated in foreign currencies at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

United States Dollar 858 347 35 112

17. TRADE PAYABLES

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Trade payables

– Third parties 6,132 9,591 – –

– Amount due to related companies – – – 97

6,132 9,591 – 97

Add:

Bill payables (Note 18) 2,575 22 – –

Other payables and accruals (Note 19) 7,823 8,307 504 703

Term loans (Note 21) 5,702 11,391 500 500

Finance lease (Note 20) 61 74 15 18

Total financial liabilities at amortised cost 22,293 29,385 1,019 1,318



17. TRADE PAYABLES (CONTINUED)

Trade payables are non-interest bearing and are normally settled on 30 to 90 days’ terms.

Trade payables denominated in foreign currencies at 31 December are as follows:

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

United States Dollar 820 685 – 97

Chinese Renminbi 430 – – –

18. BILLS PAYABLE TO BANKS

Interest rates (per annum) Group Company

2016 2015 2016 2015 2016 2015

% % $’000 $’000 $’000 $’000

Interest bearing 3.00 – 3.50 2.50-3.00 2,575 22 – –

2,575 22 – –

The bills payable are unsecured and have repayment terms of less than 12 months.

19. OTHER PAYABLES AND ACCRUALS

Group Company

2016 2015 2016 2015

$’000 $’000 $’000 $’000

(restated)

Other payables 6,070 6,753 228 318

Accrued operating expenses 1,007 806 36 155

Accrued payroll related expenses 746 748 240 230

7,823 8,307 504 703

Other payables are non-interest bearing and are normally settled on 30 to 90 days’ terms.



20. FINANCE LEASE LIABILITIES

Group

Minimum

payments

Present

value

of payments

Minimum

payments

Present

value

of payments

2016 2016 2015 2015

$’000 $’000 $’000 $’000

Not later than one year 25 22 32 28

Later than one year but not later than five years 45 39 52 46

Total minimum lease payments 70 61 84 74

Less: amounts representing finance charges (9) – (10) –

Present value of minimum lease payments 61 61 74 74

Company

Minimum

payments

Present

value

of payments

Minimum

payments

Present

value

of payments

2016 2016 2015 2015

$’000 $’000 $’000 $’000

Not later than one year 12 11 20 18

Later than one year but not later than five years 4 4 – –

Total minimum lease payments 16 15 20 18

Less: amounts representing finance charges (1) – (2) –

Present value of minimum lease payments 15 15 18 18

The Group and the Company has finance leases for certain items of plant and equipment and motor vehicles (Note 8)

ranging from 1 to 5 years (2015: 1 to 4 years). Lease terms do not contain restrictions concerning dividends, additional

debt or further leasing.

Lease obligations bear interest at rates ranging from 3.20% to 3.25% (2015: 3.20% to 3.25%) per annum.



21. TERM LOANS

Group Company

Weighted average

effective interest

rate (per annum) 2016 2015 2016 2015

$’000 $’000 $’000 $’000

SGD loan 2.68 % 500 500 500 500

Chinese Renminbi (“RMB”) loan 5.22 % 5,202 10,891 – –

5,702 11,391 500 500

SGD loan: This bank loan is unsecured and is repayable within 1 month to 12 months from date of draw down but can

be rolled over at the bank’s discretion. Interest is charged at 2.68% (2015: 1.25%) per annum over SIBOR.

RMB loan: This bank loan is drawn down by a subsidiary. It is repayable within 1 to 12 months from date of draw

down but can be rolled over at the bank’s discretion. Interest is charged at 5.22% (2015: 5.60% to 7.28%)

per annum.

22. SHARE CAPITAL

Group and Company

2016 2015

Number of

shares

Number of

shares

$’000 $’000 $’000 $’000

Issued and fully paid ordinary shares:

At beginning of year 267,392 23,406 267,392 23,406

At end of year 267,392 23,406 267,392 23,406

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares

carry one vote per share without restriction. The ordinary shares have no par value.

23. CAPITAL RESERVE

This pertains to a non-distributable capital income arising from the restructuring of subsidiary companies in prior years.



24. ENTERPRISE EXPANSION AND GENERAL RESERVE

This pertains to a general reserve fund and an enterprise expansion reserve fund set up by the Group’s subsidiaries in the

PRC, in accordance with local laws and regulations, by way of appropriation from their net profit at a rate determined

by the companies. The respective board of directors of the subsidiaries have decided that 20% of the profit after tax

be appropriated each year, of which 10% be appropriated to the general reserve fund and 10% be appropriated to the

enterprise expansion reserve fund.

The general reserve and the enterprise expansion reserve may be used to offset accumulated losses or increase the

registered capital of the subsidiaries, subject to approval from the authorities of the PRC. The reserves are not available

for dividend distribution to the shareholders.

In prior financial years, the board of directors of a subsidiary has decided to suspend the appropriation to the fund

after reviewing the accumulated amount of the fund as at 31 December 2006 which has already exceeded 50% of the

subsidiary’s paid up share capital.

25. TRANSLATION RESERVE

The foreign currency translation reserve represents exchange differences arising from the translation of the financial

statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

26. LOSS PER SHARE

Loss per share is calculated by dividing the net loss attributable to owners of the parent of $1,466,000 (2015: loss of

$1,631,000) by the weighted average number of ordinary shares outstanding during the year of 267,392,320 (2015:

267,392,320) shares.

Based on fully diluted basis, the loss per share is 0.55 cents (2015: loss per share is 0.61 cents).



27. COMPENSATION OF KEY MANAGEMENT PERSONNEL

Group

2016 2015

$’000 $’000

Short-term employee benefits 1,224 1,378

Defined contribution plans 58 60

Other short-term benefits 62 62

1,344 1,500

Comprise amounts paid to:

• Directors of the Company 887 1,049

• Other key management personnel 457 451

1,344 1,500

28. COMMITMENTS

Operating lease commitments

The Group has various operating lease agreements for office and residential premises. These leases have an average term

of between 3 and 5 years with no renewal option or escalation clauses included in the contracts. There are no restrictions

placed upon the Group or the Company by entering into these leases. Operating lease payments recognised in the

consolidated income statement during the year amount to $546,000 (2015: $121,000).

Future minimum lease payments under non-cancellable leases are as follows as of 31 December:

Group and Company

2016 2015

$’000 $’000

Not later than one year 451 59

Later than one year but not later than five years 20 180

471 239



29. SEGMENT INFORMATION

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business

segment), or in providing products or services within a particular economic environment (geographical segment), which

is subject to risks and rewards that are different from those of other segments.

Segment information is presented in respect of the Group’s geographical segments only as it is not meaningful to present

segmental reporting by business segments since revenue of the Group is primarily derived from the manufacture and

sale of dyestuffs and auxiliaries.

Inter-segment pricing is determined on an arm’s length basis. The Group’s operating businesses are organised and

managed separately by geographical segments based on location of assets. Revenue, assets and additions to property,

plant and equipment are based on the location of those assets.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated

on a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue, interest-bearing loans,

borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total costs incurred during the financial year to acquire segment assets that are

expected to be used for more than one year.



29.

SEG

MEN

T IN

FOR

MA

TIO

N (C

ON

TIN

UED

)

Peop

le’s

Rep

ublic

of

Chin

a

Oth

er A

sia

Paci

fic

Coun

trie

sEl

imin

atio

nN

ote

Gro

up

2016

2015

2016

2015

2016

2015

2016

2015

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

Reve

nue

Exte

rnal

cus

tom

ers

64,9

5776

,260

12,7

3015

,716

––

77,6

8791

,976

Inte

r-se

gmen

t36

,687

46,6

2551

51,

226

(37,

202)

(47,

851)

A–

–

Tota

l rev

enue

101,

644

122,

885

13,2

4516

,942

77,6

8791

,976

Resu

lts

Inte

rest

inco

me

406

489

3030

––

436

519

Dep

reci

atio

n an

d

am

ortis

atio

n2,

016

2,35

993

84–

–2,

109

2,44

3

Inte

rest

exp

ense

781

956

2124

––

802

980

Oth

er n

on-c

ash

ex

pen

ses/

(inco

me)

–1

–(3

)–

–B

–(2

)

Segm

ent

(loss

)/p

rofit

507

1,73

4(1

,628

)(2

,236

)92

42C

(1,0

29)

(460

)

Ass

ets

Add

ition

s to

no

n-cu

rren

t as

sets

1,95

046

068

139

––

D2,

018

599

Segm

ent

asse

ts86

,565

99,4

7225

,764

27,1

39(3

5,94

7)(3

8,96

4)E

76,3

8287

,647

Segm

ent

liab

ilitie

s40

,194

51,0

005,

287

5,02

8(2

2,78

8)(2

5,98

1)F

22,6

9330

,047



29. SEGMENT INFORMATION (CONTINUED)

Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

A Inter-segment revenues are eliminated on consolidation.

B Other non-cash expenses/(income) consist of gain on disposal of plant and equipment, impairment of trade

receivables, impairment of legal claim recoverable, inventories written down and gain on disposal of investments

properties as presented in the respective notes to the financial statements.

C The following items are added to/(deducted from) segment profit/(loss) to arrive at “profit/(loss) before tax”

presented in the consolidated statement of comprehensive income:

2016 2015

$’000 $’000

Profit from inter-segment sales 21 58

General and administrative expenses 146 392

Other operating income (75) (408)

92 42

D Additions to non-current assets consist of additions to property, plant and equipment and intangible assets.

E The following items are deducted from segment assets to arrive at total assets reported in the consolidated

statement of financial position:

2016 2015

$’000 $’000

Inter-segment assets (12,659) (12,584)

Interco balance (23,288) (26,380)

(35,947) (38,964)

F The following items are added to/(deducted from) segment liabilities to arrive at total liabilities reported in the

consolidated statement of financial position:

2016 2015

$’000 $’000

Interco balance (22,788) (25,981)

(22,788) (25,981)



30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise bank loans, hire purchase contracts, and cash and cash equivalents.

The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various

other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

It is, and has been throughout the year under review, the Group’s policy that no trading in derivative financial instruments

shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, interest rate risk and foreign

currency risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised

below.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on

its obligations.

The carrying amount of cash and cash equivalents, trade and other receivables (including subsidiaries balances)

represent the Group’s maximum exposure to credit risk in relation to financial assets. No other financial assets

carry a significant exposure to credit risk. It is the Group’s policy to provide credit terms to creditworthy customers

and debts are continually monitored. In addition, receivable balances are monitored on an ongoing basis with the

result that the Group’s exposure to bad debts is not significant. During the financial year, the Group has adopted

stricter credit policy for new customers who wish to trade on credit terms in order to mitigate heightened credit

risks arising from revenue growth strategies. The Group does not expect to incur material credit losses except as

provided for in the financial statements.

Excessive risk concentration

Concentration arise when a number of counterparties are engaged in similar business activities, or activities in the

same geographical region, or have economic features that would cause their ability to meet contractual obligations

to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative

sensitivity of the group’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the group’s policies and procedures include specific guidelines

to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed

accordingly.



30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(a) Credit risk (Continued)

Exposure to credit risk

At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk is represented by:

– the carrying amount of each class of financial assets recognised in the balance sheets with positive fair

value; and

Information regarding credit enhancements for trade and other receivables is disclosed in Notes 14.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the geographical profile of its trade receivables

on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the balance sheet

date is as follows:

Group

2016 2015

$’000 % of total $’000 % of total

By geographical:

PRC 15,685 80 22,176 81

Other Asia Pacific countries 3,984 20 5,198 19

19,669 100 27,374 100

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment

record with the Group. Cash and cash equivalents that are neither past due nor impaired are placed with reputable

financial institutions.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Notes 14.

At the balance sheet date, there is no significant concentration of credit risk. The maximum exposure to credit risk

is represented by the carrying amount of each financial asset at the balance sheet.




(b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage

of funds.

The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility

through the use of bank loans, finance lease and stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is that to maintain sufficient liquid financial

assets and stand-by credit facilities with few different banks.

The Group monitors its liquidity risk and maintains adequate level of cash and cash equivalents to finance the

Group’s operations.

Analysis of financial instruments by remaining contractual maturities

The table below summaries the maturity profile of the Group’s and the Company’s financial assets and liabilities

at the end of the reporting period based on contractual undiscounted repayment obligations.

Group

One year

or less

One to

five years Total

2016 $’000 $’000 $’000

Financial assets:

Trade and notes receivables 30,039 1,917 31,956

Cash and short-term deposits 8,034 – 8,034

Total undiscounted financial assets 38,073 1,917 39,990

Financial liabilities:

Trade and other payables 16,530 – 16,530

Other liabilities 22 39 61

Loans and borrowings 5,702 – 5,702

Total undiscounted financial liabilities 22,254 39 22,293

Total net undiscounted financial assets 15,819 1,878 17,697




(b) Liquidity risk (Continued)

Analysis of financial instruments by remaining contractual maturities (Continued)

Group

One year

or less

One to

five years Total

2015 $’000 $’000 $’000

Financial assets:

Trade and other receivables 32,713 2,363 35,076




Trade and other payables 17,920 – 17,920

Other liabilities 28 46 74

Loans and borrowings 11,391 – 11,391

Total undiscounted financial liabilities 29,339 46 29,385


Company

One year

or less

One to

five years Total

2016 $’000 $’000 $’000

Financial assets:





Trade and other payables 504 – 504

Other liabilities 11 – 11

Loans and borrowings 500 – 500

Total undiscounted financial liabilities 1,015 – 1,015

Total net undiscounted financial liabilities 5,494 1,889 7,383




(b) Liquidity risk (Continued)

Analysis of financial instruments by remaining contractual maturities (Continued)

Company

One year

or less

One to

five years Total

2015 $’000 $’000 $’000

Financial assets:





Trade and other payables 800 – 800

Other liabilities 18 – 18

Loans and borrowings 500 – 500

Total undiscounted financial liabilities 1,318 – 1,318


(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate

because of changes in market interest rates.

The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debts. Information relating

to the Group’s interest rate exposure is disclosed in the notes on term loans and leasing obligations.

Sensitivity analysis for interest rate risk

At the end of the reporting period, if SGD interest rates had been 50 (2015: 50) basis points lower/higher with

all other variables held constant, the Group’s loss before tax would have been $29,000 lower/higher in 2016 (the

Group’s loss before tax would have been $57,000 lower/higher in 2015), arising mainly as a result of lower/higher

interest expense on floating rates loans and borrowings. The assumed movement in basis points for interest rate

sensitivity analysis is based on the market environment where Singapore interest rate is influenced by the funds

liquidity in Singapore and also the interest rate trend in the U.S. and the PRC.

Surplus funds are placed with reputable banks.




(d) Foreign currency risk

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency

other than the respective functional currencies of Group entities, primarily USD. These give rise to foreign currency

risk. However, the Group tries to match the timing of its receipts and payments in the same foreign currency in

an effort to reduce foreign currency risk.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s loss before tax to a reasonably possible change in

the USD against the respective functional currencies of the Group entities, with all other variables held constant.

Group

2016 2015

$’000 $’000

Loss

before tax

Loss

before tax

USD/SGD – strengthened 3% (2015: 3%) -155 -184

– weakened 3% (2015: 3%) +155 +184

31. FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) Fair value hierarchy

The Group categories fair value measurement using a fair value hierarchy that is dependent on the valuation

inputs used as follows:

– Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can

access at the measurement date.

– Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly or indirectly.

– Level 3 – Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same

level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group has not classified any financial instrument under Level 1, Level 2 and Level 3.



31. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying

amounts are reasonable approximation of fair value

The fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are

reasonable approximation of fair value include cash and short-term deposits, current trade and other receivables,

current trade and other payables, bills payables and term loans.

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to

their short-term nature.

32. CAPITAL MANAGEMENT

Capital includes debt and equity items as disclosed in the table below.

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy

capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To

maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to

shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended

31 December 2016 and 31 December 2015.

As disclosed in Note 24, subsidiaries in the PRC are required to contribute and maintain non-distributable general and

enterprise expansion reserve fund, whose utilisation is subject to approval by the relevant PRC authorities. This externally

imposed capital requirement has been complied with by the above-mentioned subsidiaries for the financial years ended

31 December 2016 and 31 December 2015.



32. CAPITAL MANAGEMENT (CONTINUED)

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s

policy is to keep the gearing ratio below 70%. The Group includes within net debts, loans and borrowings, trade and

other payables, other liabilities, less cash and cash equivalents. Capital includes equity attributable to the owners of the

parent less the abovementioned statutory reserve fund.

Group

2016 2015

$’000 $’000

Term loans (Note 21) 5,702 11,391

Trade payables (Note 17) 6,132 9,591

Bills payable to banks (Note 18) 2,575 22

Other payables and accruals (Note 19) 7,823 8,307

Finance lease liabilities (Note 20) 61 74

Less: Cash and cash equivalents (Note 16) (8,034) (13,004)

Net debt 14,259 16,381

Equity attributable to the owners of the parent 37,778 40,923

Less: General reserve (Note 24) (4,369) (4,369)

Less: Enterprise expansion reserve (Note 24) (4,369) (4,369)

Total capital 29,040 32,185

Capital and net debt 43,299 48,566

Gearing ratio 32% 33%



33. COMPARATIVE FIGURES

In the past, declared but unpaid dividends to the non-controlling interests of a subsidiary were included in the non-

controlling interest balances. During the current financial year, the Group revisited classifications of Non-controlling

interest and other payables and accruals and the following comparative figures have been reclassified and restated to

conform to the current year’s presentation and to better reflect the nature of the transactions.

As previously

reported

2015

As restated

2015

$000 $000

Balance Sheets

Non-controlling interests 22,194 16,677

Other payables and accruals 2,790 8,307

Consolidated Statement of Comprehensive Income

Currency translation difference 162 305

Total comprehensive income attributable to non-controlling interest 247 390

Consolidated Cash Flow Statement

Foreign exchange loss 28 170

Decrease/(increase) in trade and other payables 5,199 5,057

34. AUTHORISATION OF FINANCIAL STATEMENTS

These financial statements were authorised for issue in accordance with a resolution of the directors dated 31 March 2017.



The board of directors (the “Board”) and the management (the “Management”) of Matex International Limited (the “Company”)

are committed to uphold good corporate governance practices and to comply with the Principles of the Singapore Corporate

Governance Code 2012 (the “Code”). Good corporate governance establishes and maintains an ethical environment, which strives

to enhance the interests of all shareholders. This report outlines the Company’s corporate governance processes that have been

adopted by the Company with specific reference to the principles of the Code.

BOARD MATTERS

Principle 1: Board’s Conduct of its Affairs

The Board supervises the Management of the business and affairs of the Company and its subsidiaries (the “Group”). The Board

is collectively responsible for the long-term success of the Company. The primary role of the Board is to set broad corporate and

strategic direction, approve the appointment of directors and major funding and investment proposals, and review the financial

performance of the Group.

The Board meets to consider the following:

1. Approval of nomination of Directors;

2. Approval of half year and full year results announcements;

3. Approval of annual audited results and accounts;

4. Declaration of interim dividends and proposal of final dividends;

5. Convening of shareholders’ meetings;

6. Approval of corporate direction and strategy;

7. Review the framework for prudent and effective controls which enable risks to be properly assessed and managed;

8. Authorisation of merger and acquisition transactions;

9. Authorisation of major transactions; and

10. Ensure compliance with the Code, the Companies Act (Cap 50) of Singapore, the SGX-ST Listing Manual Section B: Rules

of Catalist (the “Catalist Rules”), accounting standards and other relevant statutes and regulations.

Delegation of Authority on certain Board Matters

To facilitate effective management, certain functions have been delegated to various board committees, each of which has its

own written terms of reference and whose actions are reported to and monitored by the Board.

Meetings of the Board and Board Committees

The Board meets at least twice a year and as warranted. Ad hoc meetings are also convened to deliberate on urgent substantive

matters. Telephonic attendance and conference via audio-visual communication at board meetings are allowed under the

Company’s Constitution. The details of the number of board meetings held for FY2016 as well as the attendance of each board

member at the meetings of the board committees are disclosed below.

Report On Corporate Governance


Name of Director

Board Meetings

Nominating

Committee

Meeting

Remuneration

Committee Meeting

Audit Committee

Meetings

No. Held

No.

Attended No. Held

No.

Attended No. Held

No.

Attended No. Held

No.

Attended

Dr John Chen Seow Phun 2 2 1 1 1 1 2 2

Dr Tan Pang Kee 2 2 1 1 1 1 2 2

Mr Robson Lee Teck Leng1 1 – – – – – 1 –

Mr Dro Tan Guan Liang 2 2 1 1 1 1 2 2

Mr Foo Der Rong 2 2 1 1 1 1 2 2

Note:(1) Mr Robson Lee Teck Leng retired from the Board on 31 December 2016.

The Board takes independent professional advice as and when necessary to enable it to discharge its responsibilities effectively.

Subject to the approval of the Chairman, Directors, whether as a group or individual, may seek and obtain independent professional

advice to assist them in their duties, at the expense of the Company. Apart from keeping the Board informed of all relevant new

laws and regulations, the Company will consider appropriate training and orientation session for newly appointed directors. Upon

appointment, the newly appointed Directors will be provided a formal letter setting out their duties and obligations.

Principle 2: Board Composition and Balance

The current Board comprises five (5) Directors, three of whom namely, Dr John Chen Seow Phun, Mr Foo Der Rong and Mr Wang

Dao Fu are independent and non-executive (the “Independent Directors”). The independence of each Independent Director is

reviewed annually by the Nominating Committee (“NC”), which confirms that the Independent Directors made up at least one-

third of the Board. The NC is also of the view that the current board size is appropriate, taking into account the nature and scope

of the Company’s operations. The Board consists of high calibre members with a wealth of knowledge, expertise and experience.

They contribute valuable direction and insight, drawing from their vast experience in matters relating to accounting, finance,

legal, business and general corporate matters.

During the year, the non-executive Directors communicated among themselves without the presence of Management as and

when the occasions warrant.

Our Non-Executive Chairman, Dr John Chen, has served on the Board for more than nine years since his appointment in year 2003.

His re-election has been subject to particularly rigorous review by the NC. NC has given due consideration and in their opinion,

the NC determined that Dr John Chen is independent notwithstanding that he has served on the Board beyond nine years for

he has continued to demonstrate strong independence in character and judgement when discharging his responsibilities. In

addition, NC and Company also recognised his contribution in his fields of expertise, as someone who always exercise independent

judgment and demonstrate objectivity in his deliberations in the Company’s interest.



Principle 3: Chairman and Chief Executive Officer (“CEO”)

Different individuals assume the Chairman and CEO’s functions in the Company. The Chairman, Dr John Chen Seow Phun is

an independent non-executive director, while the CEO, Dr Tan Pang Kee, is an executive director. There is a clear division of

responsibilities between the Chairman and CEO, which ensures a balance of power and authority at top of the Company. The

Chairman and the CEO are not related to each other.

The CEO has the executive responsibility for the day-to-day operations of the Group while the Chairman bears responsibility for

the workings of the Board and ensures that procedures are introduced to comply with the Code.

Principle 4: Board Membership

Nominating Committee (“NC”)

The NC comprises three (3) independent non-executive directors, namely, Dr Foo Der Rong (Chairman of the NC), Dr John Chen

Seow Phun and Mr Wang Dao Fu. The NC, which has written terms of reference, is responsible for making recommendations to

the board on all board appointments and re-appointments. The NC’s responsibilities include the following:

(a) make recommendations to the board on new appointments to the board;

(b) make recommendations to the board on the re-nomination of retiring directors standing for re-election at the Company’s

Annual General Meeting, having regard to the directors’ contribution and performance (e.g. attendance, preparedness,

participation and candour);

(c) ensure that all directors submit themselves for re-nomination and re-election at regular intervals and at least once in every

three years;

(d) review the size and composition of the board with the objective of achieving a balanced board in terms of the mix of

experience and expertise;

(e) determine annually whether or not a director is independent;

(f) ensure complete disclosure of key information of directors in the Company’s annual reports as required under the Code;

(g) decide on how the board’s performance may be evaluated and recommend objective performance criteria to the board;

(h) report to the board on its activities and proposals; and

(i) carry out such other duties as may be agreed to by the NC and the board.

The Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. Pursuant

to Article 88 and 89 of the Company’s Constitution, more than half of board of directors retire from office at the Company’s

Annual General Meeting (“AGM”).

Dr John Chen Seow Phun, Mr Foo Der Rong and Mr Wang Dao Fu will be subject for re-election on this upcoming AGM, holds

on 27 April 2017.



Where a vacancy arises under any circumstances, or where it is considered that the Board would benefit from the services of a

new Director with particular skills, the NC, in consultation with the Board, determines the selection criteria and selects candidates

with the appropriate expertise and experience for the position.

The NC is conscious of the competing time commitments that are faced when Directors serve on multiple boards. Directors

should not serve on more principal boards than they can handle.

The Board has determined and decided that the number of listed company board representations which a director may hold,

should not be more than nine (9). This is to ensure sufficient time and attention to Company’s affairs, are given by the Directors.

Currently, the Company does not have any alternate Director on the Board.

Key information regarding Directors

Key Information on the directors is set out below:

Name of director

Academic & professional

qualifications

Board committee as chairman or

member

Directorship: Date of first

appointment/Date of last re-election

Board appointment

whether executive or

non-executive

Due for re-election

at next AGM

Past Directorships in other listed

companies and other

major appointments

over the preceding

three years

Present Directorships in other listed

companies and other major

appointments

Dr John Chen Seow Phun:

Doctor of Philosophy degree in Electrical Engineering

Chairman: Audit Committee Member: Nominating Committee & Remuneration Committee

11 July 2003/28 April 2015

Non-executive/Independent

Retirement pursuant to Article 89

Nil • OKP Holdings Ltd

• Hiap Seng Engineering Ltd

• Hanwell Holdings Ltd

• Tat Seng Packaging Group Ltd

• HLH Group Ltd• Fu Yu

Corporation Ltd

• Pavillon Holdings Ltd

Dr Tan Pang Kee

Doctor of Philosophy in Business Administration

N/A 23 March 1990/20 May 2002

Executive N/A Nil Nil



Name of director

Academic & professional

qualifications

Board committee as chairman or

member

Directorship: Date of first

appointment/Date of last re-election

Board appointment

whether executive or

non-executive

Due for re-election

at next AGM

Past Directorships in other listed

companies and other

major appointments

over the preceding

three years

Present Directorships in other listed

companies and other major

appointments

Mr Foo Der Rong

Bachelor of Commerce Degree

Chairman: Nominating CommitteeMember:Remuneration Committee & Audit Committee

10 May 2016 Non-executive/Independent


• Intraco Ltd• Tat Hong

Intraco Pte Ltd

• Tat Hong Intraco Heavy Equipment Co., Ltd

• K.A. Building Construction Pte Ltd

• K.A. Fabric Shutters Pte Ltd

• K.A. FireLite Pte Ltd

• K.A. Fireproofing Pte Ltd

• K.A. Firespray Sdn Bhd

• K.A. Group Holdings Pte Ltd

• Southern Lion Sdn Bhd

• Tian International Ltd

• Pavillon Holdings Ltd

Mr Wang Dao Fu

Bachelor of Laws

Chairman: Remuneration Committee Member:Nominating Committee & Audit Committee

11 January 2017 Non-executive/Independent


Nil • Jiangnan Agriculture Commercial Bank (China)

• Dazhou Commercial Bank (China)

• Proceq Trading (Shanghai) Co. Ltd (China)

• TH Strats 2015 Pte Ltd

• MOBO Information Technology Pte Ltd

• Xiao Ju Singapore Pte Ltd

Mr Dro Tan Guan Liang

Master in Architecture

N/A 01 March 2010/29 April 2016

Executive N/A Nil Nil



Review of Directors Independence

The Board is guided by the definition of independence given in the Code issued by the Corporate Governance Committee in

determining if a director is independent.

NC has annually, and as and when circumstances required, determined if a director is independent bearing in mind the

circumstances set forth in Guidelines 2.3 and 2.4 and any other salient factors of the Code. Any Director who has served on the

Board beyond nine years from the date of his first appointment is subject to particularly rigorous review by the NC.

Directors are also required to provide their independency confirmation, on annual basis.

Principle 5: Board Performance

Based on the recommendations by the NC, the Board has established processes and objective performance criteria for evaluating

the effectiveness of the Board as a whole and the effectiveness of the individual Director, aim to assess whether each Director

continues to contribute effectively and demonstrate commitment to the role.

In evaluating the Board’s performance, the NC considers a set of quantitative and qualitative performance criteria. The performance

criteria for the Board evaluation are in respect of board size and composition, board process, board information and accountability,

board performance in relation to discharging its principal functions and responsibilities and financial targets. The individual

Directors’ performance criteria were in relation to their industry knowledge and/or functional expertise, contribution and workload

requirements, sense of independence and attendance at the board and committee meetings.

The NC evaluated the performance of the Board as a whole taking into consideration the Board’s discharge of its principal

responsibilities, the earnings of the Group and the economic environment for 2016. The NC considered the Board’s performance

to be satisfactory.

Principle 6: Access to information

Management provides half yearly management accounts which present a balanced and understandable assessment of the Group’s

performance and position. Directors are also entitled to request from Management and are provided any additional information

that they may need for decisions and approval.

The Directors have separate and independent access to the Company’s senior management and together with the Company

Secretary, are responsible for ensuring that the board procedures are followed and that applicable rules and regulations are

complied with. The Company Secretary attends all board and specialised committee meetings and is responsible to ensure that

board procedures are followed. The appointment and the removal of the Company Secretary are subject to the approval of the

Board. During the AC meetings, AC has a separate meeting with the Company’s auditors without the presence of Management.



Principle 7: Policy for Developing Remuneration Policies

Annual Remuneration Reports

Remuneration Committee (“RC”)

Executive Directors are not involved in deciding their own remuneration. The RC comprises three (3) independent non-executive

directors, namely, Mr Wang Dao Fu (Chairman of the RC), Dr John Chen Seow Phun and Mr Foo Der Rong. The Committee has

access to expert advice in the field of executive compensation outside the Company where required.

The members of the RC carried out their duties in accordance with the term of references, which include the following:

(a) make recommendations to the board on the framework of remuneration for the directors;

(b) make recommendations to the board on the specific remuneration packages for each executive director and managing

director (or executive of equivalent rank) of the Company;

(c) review all benefits (including share schemes) and compensation packages for directors of the Company;

(d) report to the board on its activities and proposals; and

(e) carry out such other duties as may be agreed to by the RC and the board.

The Company adopts a formal procedure for the fixing of the remuneration packages of individual directors. No Director is

involved in deciding his own remuneration.

The RC reviews the Company’s obligations arising in the event of termination of Executive Directors and key executives’ contracts

of service to ensure such contracts of service contain fair and reasonable termination clauses.

Principle 8: Level and Mix of Remuneration

In making its recommendations to the Board on the level and mix of remuneration, the Remuneration Committee seeks to be

competitive in order to attract, motivate and retain high-performing executive to drive the Group’s businesses whilst operating

within the Group’s risk parameters.

In setting remuneration packages, the Company takes into account pay and employment conditions within the same industry

and in comparable companies, as well as the Group’s relative performance and the performance of individual directors.

Executive directors do not receive directors’ fees. The remuneration policy for executive directors and senior management staff

consists of two key components, that is, fixed cash and annual variable components. The fixed components include salary and

other allowances. The variable component comprises a performance based bonus which forms a significant proportion of the total

remuneration package of executive directors and is payable on the achievement of individual and corporate performance targets.



The service contracts for two executive directors have fixed appointment period and clauses relating to early termination. None

of the service contracts has any onerous removal clauses.

Non-executive directors, including the Chairman, have no service contract with the Company and their terms are specified in the

Constitution. Non-executive directors are paid a basic fee and additional fee for serving on any of the committees. In determining

the quantum of such fees, factors such as frequency of meetings, time spent and responsibilities of directors are taken into account.

Such fees are subject to the approval of the shareholders as lump sum payment at the Annual General Meeting.

There are, at present, no contractual provisions allowing the Company to reclaim incentive components of remuneration from

Executive Directors and Executive Officers in exceptional circumstances of misstatement of financial results, or of misconduct

resulting in financial loss to the Company. The Company should be able to avail itself to remedies against the Executive Directors

in the event of such breach of fiduciary duties.

Principle 9: Disclosure on Remuneration

Remuneration of Directors and Top 5 Executives

Directors

A breakdown of the gross remuneration of the Directors of the Company for the year ended 31 December 2016 is set out below:

Name of director Salary

Bonus/Profit

sharing

Other

benefits(2) Fees(1) Total

$ $ $ $ $

Dr Tan Pang Kee 506,965 38,500 9,570 – 555,035

Mr Dro Tan Guan Liang 170,491 12,000 3,415 – 185,906

Dr John Chen Seow Phun – – – 63,000 63,000

Dr Wang Kai Yuen(3) – – – 13,892 13,892

Mr Robson Lee Teck Leng(4) – – – 42,000 42,000

Mr Foo Der Rong(5) 27,300 27,300

Mr Wang Dao Fu(6) – –

677,456 50,500 12,985 146,192 887,133

(1) Subject to approval by shareholders as a lump sum at Annual General Meeting for the financial year ended 31 December 2016.

(2) Other benefits refer to benefits-in-kind such as car etc made available to directors as appropriate.

(3) Dr Wang Kai Yuen, the former Independent Director has retired at the last Annual General Meeting held on 29 April 2016.

(4) Mr Robson Lee Teck Leng, the former Independent Director has resigned on 31 December 2016.

(5) Mr Foo Der Rong, was appointed to the Board as Independent Director, Chairman of NC and member of RC and AC on 10 May 2016.

(6) Mr Wang Dao Fu, was appointed to the Board as Independent Director, Chairman of RC and member of NC and AC on 11 January 2017.



Top 5 Executives

The gross remuneration paid to top 5 executives of the group (who are not directors or the CEO) for the year ended 31 December

2016 is $456,663 and the name of these executive is set out as below.

Names of executives Remuneration band^

Serine Yeo Ngen Huay Below $250,000

Lok Fong Meng Below $250,000

Tan Pang Sim Below $250,000

Liushen Below $250,000

Chen Qing Lin Below $250,000

^Remuneration amounts are inclusive of salary, bonus, allowances and Central Provident Fund contributions.

For avoidance of competition, neither the breakdown in terms of percentage or dollar of each key management personnel nor the upper limit of highest remuneration

band is disclosed. This is to impede solicitation of key executives by the Group’s competitors.

Immediate Family Member of Directors and CEO

Besides Mr Dro Tan Guan Liang, who is the son of Dr Tan Pang Kee, the Chief Executive Director/Managing Director (“CEO/

MD”) of the Company, whose remuneration is disclosed above, Mr Tan Pang Sim (brother of CEO/MD) and Madam Lim Kooi Yee

(daughter-in-law of CEO/MD and wife of director, Mr Dro Tan Guan Liang) were also earning in excess of $50,000 for the year

ended 31 December 2016. Both are drawing in the remuneration band of $50,000 to $100,000.

Approved by Shareholders

Directors’ fees are approved by shareholders at the Annual General Meeting. The remuneration framework for executives and

executive directors has been approved by the RC and endorsed by the Board. The Board considers that the remuneration

framework does not need to be approved by the shareholders.

ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Company prepares its financial statements in accordance with the Singapore Financial Reporting Standards (“SFRS”). The

Company disseminates half-year and full-year financial results and other related material information of the Group to Shareholders

via announcements to the SGX-ST.

The Board has taken adequate steps to ensure compliance with legislative and regulatory requirements, including requirements

under the Catalist Rules.



Principle 11: Risk Management and Internal Controls

Risk Management

The Company has devised a framework for prudent and effective controls which enable risks to be properly assessed and managed.

Internal Controls

Our Board is cognizant of its responsibility for maintaining a sound system of internal controls to safeguard the shareholders’

investments and the Group’s assets and business. The Board has engaged the services of an independent accounting and auditing

firm, Nexia TS Risk Advisory Pte Ltd (“Nexia TS”), as its internal auditors in respect of internal audit services. The Board believes

that, in the absence of any evidence to the contrary, the system of internal control maintained by the Company’s management

throughout the financial year and up to the date of this report, provide reasonable, but not absolute, assurance in the safeguarding

of assets, compliance with relevant legislations, identification and containment of business risks, and against material financial

misstatements or loss.

Therefore, with the concurrence of the AC, the Board is of the opinion that current internal controls are adequate in addressing

financial, operational, compliance and IT risks, while noting that no system of internal control could provide absolute assurance

against the occurrence of errors, fraud or other irregularities.

For FY2016, the Board also confirms it has received assurance from the CEO and CFO:

(a) that the financial records have been properly maintained and the financial statements give a true and fair view of the

company’s operations and finances; and

(b) regarding the effectiveness of the company’s risk management and internal control systems.

The AC and Management will continually assess the adequacy and effectiveness of the risk management framework and processes,

and focus on improving the standard of internal controls as well as corporate governance. It has engaged Nexia TS to review its

risk management framework and help the Board to assess the rating of each risk after considering the control procedures that

are in place to mitigate those risks.

The Board did not establish a separate Board risk committee as the Board is currently assisted by the AC, internal auditors and

external auditors in carrying out its responsibility of overseeing the Group’s risk management framework and policies.

Principle 12: Audit Committee (“AC”)

The AC comprises three (3) independent non-executive directors, namely, Dr John Chen Seow Phun (Chairman of the AC), Mr

Foo Der Rong and Mr Wang Dao Fu.



The Board is of the view that the members of the AC have sufficient financial management expertise and experience to discharge

the AC’s functions.

The AC, which has written terms of reference, performs delegated functions:

Internal Controls

(a) (i) Ensure that arrangement is made for the review of the effectiveness of the Company’s material internal controls,

including financial, operational and compliance controls and risk management, in particular to the compliance of

Catalist Rule 1204(10), at least annually;

(ii) Review of internal audit report;

External Audit

(b) Review the audit plans of the external auditors;

(c) Review the external auditors’ consideration of the system of internal accounting controls relevant to the entity’s preparation

of financial statements;

(d) Review the external auditors’ management letter and response from the Company’s management;

(e) Review the scope and results of the external audits and their cost effectiveness;

(f) Nominate external auditors for re-appointment;

The Company confirms its compliance with Catalist Listing Rules 712, 715 and 716 in relation to its auditing firms in respect of

FY2016.

Financial Statements

(g) Review the financial statements of the Company and the Group before submission to the Board. The AC has with support

from Ernst & Young as the external auditor, reviewed the suitability of the accounting policies which have been adopted

and whether management has made appropriate estimates and judgements.

Set out below are the areas considered to be most key audit matters:–

• Recoverability of trade account receivables; and

• Allowance for Inventory obsolescence



The AC considered the approach and procedures adopted by the external auditor during their course of audit field work,

sufficient and appropriate. The AC reviewed Management’s assumption on the recoverability of the receivables and the

assessment on inventory obsolescence, is in agreement with the external auditor that no further impairment triggers were

identified in the year.

Following the review and discussions, the AC recommended to the Board to approve the full year financial statement.

Compliance with the Laws and Regulations

(h) Review transactions falling within the scope of the Catalist Rules, in particular matters pertaining to interested person

transactions and acquisitions and realisations as laid down in the Catalist Rules;

(i) Generally undertake such other functions and duties as may be required by statute, the Catalist Rules or the Code, and by

such amendments made thereto from time to time;

Others

(j) Undertake such other reviews and projects as may be requested by the Board and report to the Board its findings from

time to time on matters arising and requiring the attention of the AC.

The AC is authorised by the Board to:

(a) review half-yearly and annual financial statements and auditors’ report of the Group before submitting to the Board;

(b) review the audit plans of external auditors of the Company and ensure the adequacy of the Group’s system of accounting

and the co-operation given by the Company’s Management to the external auditors;

(c) review all non-audit services provided by the external auditors to the Group to ensure that the nature and extent of such

services would not affect the independence of the external auditors;

(d) investigate any matter within its terms of reference;

(e) seek information it requires from any employee and all employees are directed to co-operate with any requests made by

the AC;

(f) if it deems appropriate, seek the professional advice of external consultants;

(g) invite such persons (e.g. director, executive officer) to attend its meeting;



(h) make recommendation to the Board on the proposals to the Shareholders on the appointment, re-appointment and removal

of the external auditor, and approve the remuneration and terms of engagement of the external auditor; and

(i) review interested person transactions in accordance with the requirements of the Catalist Rules.

The AC also meets with external and internal auditors without the presence of the Management at least once a year to obtain

feedback on the competency and adequacy of the finance function and to ascertain if there is any material weakness in control

effectiveness in the Group’s financial reporting and operation systems.

INDEPENDENCE OF AUDITORS

Noted that besides performing the statutory audit of the Company’s annual accounts, Ernst & Young LLP, has been engaged to

provide tax services (non-audit services) to the Company.

The audit and non-audit services that were rendered by the Company’s auditors, Ernst & Young LLP, to the Group and their

related fees for FY2016 are as follows:

S$’000

Audit fees 68

Non-audit fees 9

Total 77

The Audit Committee has reviewed the said fees and in view that Ernst & Young LLP’s fee in relation to the non-audit services is

less than 50% of the total audit fee, the Audit Committee forms the opinion that Ernst & Young LLP’s independence as auditors

would not be affected by their provision of the non-audit services.

CODE OF CONDUCT

The Directors and employees of the Company are required to observe, uphold and maintain high standards of integrity and

properly in carrying out their roles and responsibilities, and to comply with applicable laws and regulations.

The Company has put in place a whistle-blowing framework, endorsed by the Audit Committee, where employees of the Company

may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters. To

ensure proper investigation of such matters and for appropriate follow up action, once the investigation has been concluded,

the Investigation Officer must report the outcome of the investigation (including any recommendations for improvement) to the

Monitoring Officer who will keep a central register of all complaints.

For FY 2016, there were no reported incidents pertaining to whistle blowing.



Principle 13: Internal Audit

Nexia TS is currently engaged as the internal auditors of the Group and report directly to the Chairman of AC on audit matters

and to the CEO on administrative matters. The internal auditor has full access to all the Company’s documents, records, properties

and personnel, including access to the AC. The internal auditor is guided by the Standards for the Professional Practice of Internal

Auditing prescribed by the Institute of Internal Auditors. The AC review the adequacy and effectiveness of the internal audit

function annually.

The objective of the internal audit function is to provide an independent review of the effectiveness of the Group’s internal controls

and provide reasonable assurance to the AC and the management that the Group’s risk management, controls and governance

processes are adequate and effective. The AC has reviewed the annual internal audit plan for FY2016.

The AC is satisfied that the internal auditors has adequate resources to perform its function effectively and is staffed by suitably

qualified and experienced professionals with the relevant experience.

SHAREHOLDER RIGHTS

Principle 14: Shareholder Rights

The Company ensures that all material information is disclosed on a comprehensive, accurate and timely basis so as to facilitate

Shareholders’ ownership rights. The Company reckons that the release of timely and relevant information would enable

Shareholders to make informed decisions in respect of their investments in the Company.

All Shareholders are entitled to attend the Annual General Meeting (“AGM”) and are accorded the opportunity to participate

effectively in the AGM. The Company’s Constitution allows a member of the Company to appoint not more than two proxies to

attend and vote in the Shareholders’ place at the AGM. The Company is not implementing absentia-voting methods such as by

mails, e-mails or fax until security, integrity; legislative recognition of electronic voting and other pertinent issues are satisfactory

resolved.

COMMUNICATION WITH SHAREHOLDERS

Principle 15: Communication with Shareholders

The Board is mindful of the obligation to provide regular, effective and fair communication to shareholders. Information is

communicated to the Shareholders on a timely basis. Where inadvertent disclosure has been made to a select group, the Company

will make the same disclosure publicly to all others as soon as possible. The Board provides shareholders with an assessment of

the Company’s performance, position and prospect on a half-yearly basis via half-yearly announcement of results and other ad

hoc announcement as required by the SGX-ST. The Company’s Annual Report is sent to all shareholders and other information

is accessible at the Company’s website.



The Group does not have a concrete dividend policy at present. The form, frequency and amount of dividends declared each

year will take into consideration the Group’s profit growth, cash position, cash flow generated from operations, projected capital

requirements for business growth and other factors as the Board may deem appropriate. There is no dividend payment to

Shareholders for FY2016 in view of funding needs for future business developments and expansion.

Principle 16: Conduct of Shareholder Meetings

The Company recognises the effective communication can highlight transparency and enhance accountability to its Shareholders.

The AGM of the Company is a principal forum for dialogue and interaction with all Shareholders. The Board encourages active

Shareholders participation in general Shareholder meetings, including AGM and Extraordinary General Meetings. The Board

welcomes the views of Shareholders on matters affecting the Company, whether at Shareholders’ meetings or on an ad hoc basis.

Shareholders are informed of Shareholders’ meetings through notices published in the newspaper and reports or circulars sent

to all shareholders. Each item of special business included in the notice of the meeting is accompanied, where appropriate, by

an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting.

The Chairmen of the AC, RC and NC are normally available at the meeting to answer those questions relating to the work of these

committees. The external auditors are also present to assist the directors in addressing any relevant queries by shareholders.

Additionally, the Company prepares minutes of general meetings, which are made available to Shareholders upon their request.

Shareholders are encouraged to attend the AGM of the Company to ensure a high level of accountability and to stay informed

of the Company’s strategy and goals. The Board allows all Shareholders to exercise its voting rights by participation and voting

at general meetings.

The Company ensures that there are separate resolutions at general meetings on each distinct issue.

The Company’s Constitution allows a member of the Company to appoint one or two proxies to attend and vote at its general

meetings.

The Company holds its Shareholders’ meetings onsite at its premises in order to provide Shareholders with greater opportunity

to understand the Company’s business operations.

MATERIAL CONTRACTS

The Group does not have material contracts involving the interest of the CEO, each director or substantial shareholders either still

subsisting as at 31 December 2016 or it not then subsisting, entered into since the end of the previous financial year.

DEALING IN SECURITIES

The Company has adopted and implemented an internal code of conduct which prohibits the directors, key executives and

their connected persons from dealing in the Company’s shares during the “black-out” period – being one month immediately

preceding the announcement of the Company’s half-year and full-year results. Further, an officer of the Company should not



deal in the Company’s securities on short-term considerations. This has been made known to directors, officers and staff of the

Company. It has been highlighted that to deal in the Company’s securities as well as securities of other listed companies when

the officers (directors and employees) are in possession of unpublished material price sensitive information in relation to those

securities is an offence and the law on insider trading is applicable at all times.

INTERESTED PERSON TRANSACTIONS

There is no general mandate from Shareholders for interested person transactions. The Company has established procedures to

ensure that all transactions with interested persons are reported in a timely manner to the AC and that the transactions are carried

out on an arm’s length basis. The Company confirms that there were no interested person transactions of more than S$100,000

during the financial year under review.

NON-SPONSOR FEES

In compliance with Rule 1204(21) of the Catalist Rules, there were no non-sponsor fees paid to the Company’s sponsor, CIMB

Bank Berhad, Singapore Branch, during the financial year under review.



SHARE CAPITAL

Paid-Up Capital : 23,406,449.99

Class of Shares : Ordinary Shares

Voting Rights : On the poll: one vote per share

BREAKDOWN OF SHAREHOLDINGS BY RANGE

SIZE OF SHAREHOLDINGS

NO. OF

SHAREHOLDERS

% OF

SHAREHOLDERS

NO. OF

SHARES

% OF ISSUED

SHARE CAPITAL

1 – 99 37 3.74 287 0.00

100 – 1,000 102 10.32 99,410 0.04

1,001 – 10,000 296 29.96 1,788,000 0.67

10,001 – 1,000,000 523 52.94 71,969,962 26.91

1,000,001 AND ABOVE 30 3.04 193,534,661 72.38

TOTAL 988 100.00 267,392,320 100.00

SUBSTANTIAL SHAREHOLDINGS AS AT 14 MARCH 2017

Name of

substantial shareholder

Number of

shares

registered in

the name of

the substantial

shareholder

Number of

shares in which

substantial

shareholder is

deemed to have

an interest Total Percentage (%)

Dr Tan Pang Kee 58,232,000 – 58,232,000 21.78%

Tan Geok Bee 40,000,000 – 40,000,000 14.96%

Statistic of ShareholdersAS AT 14 MARCH 2017


TWENTY LARGEST SHAREHOLDERS

No. Name of Shareholder No. of Shares

% of Issued

Share Capital

1 TAN PANG KEE 58,232,000 21.78

2 TAN GEOK BEE 40,000,000 14.96

3 UOB KAY HIAN PTE LTD 9,580,000 3.58

4 CHUA GEOK KOON 9,170,000 3.43

5 TAN EE SOON 8,337,582 3.12

6 PHILLIP SECURITIES PTE LTD 7,594,000 2.84

7 PAUL GO KIAN LEE 6,893,000 2.58

8 HL BANK NOMINEES (SINGAPORE) PTE LTD 4,099,000 1.53

9 MAYBANK KIM ENG SECURITIES PTE LTD 3,409,000 1.27

10 TAN HOCK SOON 3,386,332 1.27

11 TAN SOON HENG 3,386,332 1.27

12 TAN SOON LAI 3,386,332 1.27

13 TAN YAM SOON 3,386,332 1.27

14 TAN CHAI CHIN 3,370,688 1.26

15 LEE KANG HUAT 3,000,000 1.12

16 LOW KOK SOON 2,919,000 1.09

17 OCBC SECURITIES PRIVATE LTD 2,449,163 0.91

18 CHUA WEE SIM 2,060,000 0.77

19 ONG GIM LOO 2,051,000 0.77

20 SIM TECK HUAT 2,040,000 0.76

TOTAL 178,749,761 66.85

PERCENTAGE OF SHAREHOLDINGS HELD IN HANDS OF PUBLIC

Based on the information available to the company as at 14 March 2017, approximately 63.00% of the issue ordinary share of the

Company is held by the public and therefore, Rule CR 723 of Catalist Listing Manual issued by Singapore Exchange Securities

Trading Limited has accordingly been complied with.

Statistic of ShareholdersAS AT 14 MARCH 2017



Notice of Twenty-Seventh Annual General Meeting

Notice is hereby given that the Twenty-Seventh Annual General Meeting (“AGM”) of the Company will be held at 47 Ayer Rajah

Crescent, #05-10 Singapore 139947 on Thursday, 27 April 2017 at 10.30 a.m. to transact the following business: -

Ordinary Business

1 To receive and adopt the Directors’ Statement and Audited Financial Statements for the financial year ended 31 December

2016 and the Auditors’ Report thereon. [Resolution 1]

2 To re-elect Dr John Chen Seow Phun who is retiring in accordance with Article 89 of the Company’s Constitution, as

Director of the Company. [Resolution 2]

Note: Dr John Chen Seow Phun, if re-elected, will remain the Chairman of the Board of Directors and the Company’s audit

committee and a member of the Company’s remuneration committee and nominating committee and will be considered

as an independent director.

3 To re-elect Mr Foo Der Rong who is retiring in accordance with Article 88 of the Company’s Constitution, as Director of

the Company. [Resolution 3]

Note: Mr Foo Der Rong, if re-elected, will remain the Chairman of the nominating Committee and a member of the

Company’s remuneration committee and audit committee and will be considered as an independent director.

4 To re-elect Mr Wang Dao Fu who is retiring in accordance with Article 88 of the Company’s Constitution, as Director of

the Company. [Resolution 4]

Note: Mr Wang Daofu, if re-elected, will remain the Chairman of the Company’s remuneration committee and a member

of the Company’s nominating committee and audit committee and will be considered as an independent director.

5 To approve a sum of up to S$147,000 as directors’ fees for the year ending 31 December 2017, to be paid quarterly in

arrears. (2016: S$147,000) [Resolution 5]

6 To re-appoint Ernst & Young LLP as auditors and to authorise the Directors to fix their remuneration. [Resolution 6]



Special Business

7 To consider and, if thought fit, to pass the following as Ordinary Resolution, with or without modifications:–

That, pursuant to Section 161 of the Companies Act and Rule 806 of Section B: Rules of the Catalist of the Listing Manual

(“Catalist Rules”) of the Singapore Exchange Securities Trading Limited (“SGX-ST”) and the Constitution of the Company,

the Directors of the Company be authorized and empowered to:

(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively “Instruments”) that might or would require

shares to be issued, including but not limited to the creation and issue of (as well as adjustments to)

options, warrants, debentures or other instruments convertible into shares, at any time and upon such

terms and conditions and for such purposes and to such persons as the Directors of the Company may in

their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in

pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force,

provided that:

(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted

pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed one hundred per cent (100%)

of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in

accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued (including shares

to be issued pursuant to the Instruments) other than on a pro rata basis to existing shareholders of the Company

shall not exceed fifty per cent (50%) of the total number of issued shares (excluding treasury shares) in the capital

of the Company (as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate

number of shares (including shares to be issued pursuant to the Instruments) that may be issued under sub-

paragraph (1) above, the percentage of issued shares shall be based on the total number of issued shares (excluding

treasury shares) in the capital of the Company at the time this Resolution is passed, after adjusting for:

(a) new shares arising from the conversion or exercise of the Instruments or any convertible securities;

(b) new shares arising from exercising share options or vesting of share awards outstanding and subsisting at

the time of the passing of this Resolution; and

(c) any subsequent consolidation or subdivision of shares;



(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the

Listing Manual – Section B: Rules of Catalist of the SGX-ST for the time being in force (unless such compliance has

been waived by the SGX-ST) and the Constitution of the Company; and

(4) unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall

continue in force until the conclusion of the next Annual General Meeting (“AGM”) of the Company or the date

by which the next AGM of the Company is required by law to be held, whichever is the earlier.

[See Explanatory Note] [Resolution 7]

8 To transact any other business that may be properly transacted at an Annual General Meeting.

[Resolution 8]

By Order of the Board

Alex Tan Pang Kee

Chief Executive Officer/Managing Director

Singapore

11 April 2017

Explanatory Note:

Resolution 7, if passed, will empower the Directors of the Company, from the date of the above AGM until the next AGM of the

Company, or the date by which the next AGM of the Company is required by law to be held or such authority is varied or revoked

by the Company in a general meeting, whichever is the earlier, to allot and issue shares or grant Instruments convertible into

shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, one hundred per cent (100%)

of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to fifty per cent (50%)

may be issued other than on a pro-rata basis to shareholders.

For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares)

will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the

time this Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities

or share options or vesting of share awards which are outstanding or subsisting at the time when this Resolution is passed and

any subsequent bonus issue, consolidation or subdivision of shares.



Proxies:

1 (a) A member who is not a relevant intermediary is not entitled to appoint more than two proxies to attend, speak

and vote at the meeting. Where such member’s form of proxy appoints more than one proxy, the proportion of

the shareholding concerned to be represented by each proxy shall be specified in the form of proxy, failing which

the nomination shall be deemed to be alternative.

(b) A member who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote

at the meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares

held by such member. Where such member’s form of proxy appoints more than two proxies, the number and

class of shares in relation to which each proxy has been appointed shall be specified in the form of proxy.

“Relevant intermediary” has the meaning ascribed to it in Section 181 of the Companies Act, Cap 50.

2 A proxy need not be a member of the Company.

3 The instrument appointing a proxy or proxies, duly executed, must be deposited at the registered office of the Company

at 47 Ayer Rajah Crescent, #05-10 Singapore 139947, not less than 48 hours before the time appointed for the holding of

the AGM.

Personal Data Privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment

thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or

its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed

for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other

documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any

applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses

the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior

consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal

data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect

of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

This document has been prepared by the Company and its contents have been reviewed by the Company’s Sponsor, CIMB Bank

Berhad, Singapore Branch (“Sponsor”) for compliance with the relevant rules of the Singapore Exchange Securities Trading

Limited (the “SGX-ST”), this being the SGX-ST Listing Manual Section B: Rules of Catalist.. The Sponsor has not independently

verified the contents of this document.

This document has not been examined or approved by the SGX-ST. The SGX-ST and the Sponsor assume no responsibility for

the contents of this document including the correctness of any of the statements or opinions made or reports contained in this

document.

The contact persons for the Sponsor are Mr Yee Chia Hsing, Head, Catalist, Investment Banking and Mr Lee Chee Cheong, Associate

Director, Investment Banking, CIMB Bank Berhad, Singapore Branch. The contact particulars are 50 Raffles Place, #09-01 Singapore

Land Tower, Singapore 048623, Telephone: +65 6337 5115.

MATEX INTERNATIONAL LIMITED(Incorporated in the Republic of Singapore)

Company Registration No. 198904222M

PROXY FORM– ANNUAL GENERAL MEETING

I/We NRIC/Passport/Co. reg. No.

Of being a member/members of MATEX INTERNATIONAL LIMITED hereby appoint

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

as my/our proxy/proxies to attend, speak and to vote for me/us on my/our behalf at the Annual General Meeting of MATEX INTERNATIONAL LIMITED to be held at 47 Ayer Rajah Crescent, #05-10 Singapore 139947 on Thursday, 27 April 2017 at 10.30 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No.Ordinary Resolutions *No. of Votes

For*No. of Votes

Against

Ordinary Business:

1. Adoption of Reports and Financial Statements

2. Re-election of Dr John Chen Seow Phun

3. Re-election of Mr Foo Der Rong

4. Re-election of Mr Wang Dao Fu

5. Approval of Director’ fees for FY2017 to be paid quarterly in arrears

6. Re-appointment of Auditors

Special Business:

7.Authority for Directors to issue shares and convertible securities pursuant to Section 161 of the Companies Act, Cap. 50

8. Any other ordinary business

* Voting will be conducted by poll. If you wish to exercise all your votes “For” or “Against” the relevant resolution, please indicate with an “X” within the relevant box provided. Alternatively, if you wish to exercise your votes both “For” and “Against” the relevant resolution, please indicate the number of shares in the boxes provided.

Dated this day of 2017.

Signature(s) of Member(s) or Common Seal of Corporate Member

IMPORTANT: PLEASE READ NOTES OVERLEAF

IMPORTANT1 Relevant intermediaries as defined in Section 181 of the

Companies Act, Cap. 50 may appoint more than two proxies to attend, speak and vote at the annual general meeting.

2 For CPF/SRS investors who have used their CPF monies to buy shares in Matex International Limited, this form of proxy is not valid for use and shall be ineffective for all intents and purposes if used or purported to be used by them.

3 By submitting an instrument appointing a proxy(ies) and/or representative(s), a member accepts and agrees to the personal data privacy terms set out in the notice of annual general meeting dated 11 April 2017.

Total Number of Shares Held:

MATEX INTERNATIONAL LIMITED

PROXY FORM

Continuation Sheet 1

Notes:-

1. If the member has shares entered against his name in the Depository Register (maintained by The Central Depository (Pte) Limited), he should insert that number of

shares. If the member has shares registered in his name in the Register of Members (maintained by or on behalf of the Company), he should insert that number of

shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members, he should insert

the aggregate number of shares entered against his name in the Depository Register and registered in his name in the Register of Members. If the number of shares

is not inserted, this form of proxy will be deemed to relate to all the shares held by the member.

2. (a) A member who is not a relevant intermediary is not entitled to appoint more than two proxies to attend, speak and vote at the meeting. Where such member’s

form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of

proxy, failing which the nomination shall be deemed to be alternative.

(b) A member who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the meeting, but each proxy must be

appointed to exercise the rights attached to a different share or shares held by such member. Where such member’s form of proxy appoints more than two

proxies, the number and class of shares in relation to which each proxy has been appointed shall be specified in the form of proxy.

3 A proxy need not be a member of the Company.

4 The instrument appointing a proxy must be deposited at the registered office of the Company at 47 Ayer Rajah Crescent, #05-10 Singapore 139947, not less than

forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting.

5 The instrument appointing a proxy must be signed by the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy is given by

a corporation, it must be executed either under its common seal or signed on its behalf by an attorney duly authorized in writing or a duly authorised officer of the

corporation.

6 Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must

(failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

7 A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the

Annual General Meeting, in accordance with Section 179 of the Companies Act, Cap. 50.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the

appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered

in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares

entered against his name in the Depository Register as at seventy-two (72) hours before the time appointed for the holding of the Annual General Meeting, as certified by

The Central Depository (Pte) Limited to the Company.

Personal Data Privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms set out in the Notice of

Annual General Meeting dated 11 April 2017.

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CONTE

NTS

Corporate Information ................................................................................................................. 01

Corporate Profile ...................................................................................................................................... 02

Our Vision/Mission ............................................................................................................................... 03

Our Value/Promise ................................................................................................................................ 04

Group Structure ......................................................................................................................................... 05

Message to Shareholders ....................................................................................................... 06

Board of Directors .................................................................................................................................. 08

Key Management ................................................................................................................................... 10

Financial Highlights ........................................................................................................................... 11

Financial Contents ................................................................................................................................ 12

OUR GLOBAL PRESENCE

Korea

Taixing

Russia

Shanghai

Taiwan

Hong Kong

Philippines

Malaysia

Singapore

Indonesia

VietnamCambodia

Sri Lanka

Thailand

Myanmar

Nepal

Uzbekistan

Turkey

Syria

EgyptMorocco

USA

Mexico

Colombia

Peru

ChileArgentina

BrazilEcuador

Spain

Switzerland

England

GermanyFrance

Portugal

Pakistan

India

Bangladesh

Japan

Mauritius

South Africa

SHANGHAI

MALAYSIA HQ-SINGAPORE

TAIXINGTAIXING

This document has been prepared by the Company and its contents have been reviewed by the Company’s Sponsor, CIMB Bank Berhad, Singapore Branch (“Sponsor”) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), this being the SGX-ST Listing Manual Section B: Rules of Catalist.. The Sponsor has not independently verified the contents of this document.

This document has not been examined or approved by the SGX-ST. The SGX-ST and the Sponsor assume no responsibility for the contents of this document including the correctness of any of the statements or opinions made or reports contained in this document.

The contact persons for the Sponsor are Mr Yee Chia Hsing, Head, Catalist, Investment Banking and Mr Lee Chee Cheong, Associate Director, Investment Banking, CIMB Bank Berhad, Singapore Branch. The contact particulars are 50 Raffles Place, #09-01 Singapore Land Tower, Singapore 048623, Telephone: +65 6337 5115.

MA

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LIVINGTHE CULTURE OF

47 Ayer Rajah Crescent, #05-10, Singapore 139947

Tel: 65 6861 0028 Fax: 65 6861 0128

Email: [email protected]: www.matex.com.sg

ECO-FRIENDLY ∙ NATURAL ∙ BIODEGRADABLE

ANUUAL REPORT 2016

Documents

MATEX INTERNATIONAL LIMITEDmatex.com.sg/attachments/Matex/annualreports/6/Matex...MATEX INTERNATIONAL LIMITED ANNUAL REPORT 2016 LIVING THE CULTURE OF 47 Ayer Rajah Crescent, #05-10,